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Texas Roadhouse opened a new restaurant in October. During its first three months of operation, the restaurant sold gift cards in various amounts totaling $1,800. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $728 were presented for redemption during the first three months of operation prior to year-end on December 31. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Texas Roadhouse will remit sales taxes in January.

Required:
a. Record (in summary form) the S3,500 in gift cards sold (keeping in mind that, in actuality, the firm would record each sale of a gift card individually).
b. Record the S728 in gift cards redeemed.
c. Determine the balance in the Deferred Revenue account (remaining liability for gift cards).

User Cgee
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1 Answer

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Answer:

General Journal Debit Credit

1 Cash 2600

Unearned revenue 2600

(To record gift cards sold)

2 Unearned revenue 832

Sales tax payable 32

Sales revenue 800

(To record gift cards redeemed)

User Brad Oestreicher
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