Question

A customer purchases $340 worth of merchandise from The GAP using a gift card. What is the journal entry The Gap records?

a. DR Cash $340; CR Unearned Revenue $340
b. DR Revenue $340; CR Unearned Revenue $340
c. DR Cash $340; CR Revenue $340
d. DR Unearned Revenue $340; CR Revenue $340"

Answer 1

Option (d) is correct.

Step-by-step explanation:

Given that,

Customer purchases $340 worth of merchandise from The GAP using a gift card.

A gift card is having an amount of money that is used by the gift card holder for the purpose of purchasing goods. So, in the books of GAP, the value of gift card is debited as an unearned revenue and the sales revenue is credited.

The journal is as follows:

Unearned revenue A/c Dr. $340

To sales revenue A/c $340

(To record the merchandise sold for a gift card)