Question

In January 2021, Summit Department Store sells a gift card for $50 and receives cash. In February, 2021, the customer comes back and spends $20 of the gift card to purchase a water bottle. What would be the appropriate journal entry for the sale of the gift card in January?

Answer 1

Answer:

cash 50 debit

 unearned revenue 50 credit

Explanation:

The sale of the gitf card is done in january. The information of February's transaction is not relevant to decide how to record this sale.

The sales was in cash, so the company receive cash, this account will increase by 50.

Also the company will recognize the unearned revenue, this is not earned yet. It will be earned when redeemed.