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Meadville Industries Sells Gift Certificates That Are Redeemable in Merchandise

question 55

Essay

Meadville Industries sells gift certificates that are redeemable in merchandise. During 2009, Meadville sold gift certificates for $88,000. Merchandise with the total price of $52,000 was redeemed during the year. For Meadville, the cost of the merchandise sold was $32,000. Meadville sold gift certificates for the first time in 2009. The journal entry recording the sale of the gift certificates will include:
a. a debit to Certificate Liability for $88,000
b. a debit to Deferred Revenue for $88,000
c. a credit to Sales for $88,000
d. a credit to Deferred Revenue for $88,000


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