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Allushta [10]
3 years ago
14

Texas Roadhouse opened a new restaurant in October. During its first three months of operation, the restaurant sold gift cards i

n various amounts totaling $3,500. 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:
1. Record (in summary form) the $3,500 in gift cards sold (keeping in mind that, in actuality, the firm would record each sale of a gift card individually).
2. Record the $728 in gift cards redeemed. The $728 includes a 4% sales tax of $28.
3. Determine the balance in the Unearned Revenue account (remaining liability for gift cards) Texas Roadhouse will report on the December 31 balance sheet.
Business
1 answer:
Lostsunrise [7]3 years ago
4 0

Answer:

To record the sales of gift cards

Dr Cash 3,500

    Cr Unearned revenue 3,500

To record the redemption of sales cards

Dr Unearned revenue 728

    Cr Sales revenue 700

    Cr Sales taxes payable 28

The balance of the unearned revenue account:

Debit            Credit

                    $3,500

<u>$728                        </u>

                    $2,772

The unearned revenue account has a $2,772 credit balance on December 31.

Both unearned revenue and sales taxes payable are liability accounts that have a credit balance.

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