Question

During January 2021, the following transactions occur:January 2 Sold gift cards totaling $8,400. The cards are redeemable for merchandise within one year of the purchase date.January 6 Purchase additional inventory on account, $149,000.January 15 Firework sales for the first half of the month total $137,000. All of these sales are on account. The cost of the units sold is $74,800.January 23 Receive $125,600 from customers on accounts receivable.January 25 Pay $92,000 to inventory supplier

Answer 1

Answer:

Cash                                  8,400 debit

   gift card liablity                     8,400 credit

inventory                    149,000 debit

   accounts payable                149,000 credit

accounts receivable    137,000 debit

  sales revenues                      137,000 credit

COGS                            74,800 debit

  inventory                                 74,800 credit

Cash                              125,600 debit

       Accounts Receivable       125,600 credit

Accounts Payable            92,000 debit

           Cash                              92,000 credit

Explanation:

We record considering debit = credit

a) the gift card are a liability as we assume the obligation to rovide with goods to the gift card owner later.

b) we purchase on account sowe have to pay them later

c)the sales are revenue and the cost of the invenory is an expense, also our inventory decrease by this amount

d) the amount collected decreases our accounts receivables

e) the amount disbursement reduce our debt with the providor