Question

In January, 2018, ABC. sells a gift card for $50 and receives cash. In February, 2018, the customer comes back and spends $20 of their gift card on a water bottle. What would be the appropriate journal entry for the purchase of the water bottle?3

Answer 1

Answer and Explanation:

The journal entry to record the purchase of the water bottle is shown below:

Deferred Revenue $20

To Sales Revenue, $20

(being the purchase of the water bottle is recorded)

The deferred revenue is debited as it decreased the liability and the sales revenue is credited as it increased the revenue

The above journal entry should be recorded