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Escargot Inc. is a 5-star restaurant in Cincinnati. The restaurant sells 500 gift cards during January 2019. Each gift card has a face value of $300. The gift cards never expire, although based on industry experience, Escargot expects that 12% of the balances will never be redeemed. During February 2019, $45,000 of gift cards are redeemed, and in March 2019 another $80,000 is redeemed. Required: 1. Prepare journal entries for Escargot’s gift card transactions for January through March. 2. Assume that in April, due to the popularity of the restaurant, Escargot reduces its estimate of the amount of gift cards that will go unused to 8%. During April, gift cards worth $10,000 are used. Prepare any necessary journal entries.

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 17, Problem 9P
Textbook Problem

Escargot Inc. is a 5-star restaurant in Cincinnati. The restaurant sells 500 gift cards during January 2019. Each gift card has a face value of $300. The gift cards never expire, although based on industry experience, Escargot expects that 12% of the balances will never be redeemed. During February 2019, $45,000 of gift cards are redeemed, and in March 2019 another $80,000 is redeemed.

Required:

  1. 1. Prepare journal entries for Escargot’s gift card transactions for January through March.
  2. 2. Assume that in April, due to the popularity of the restaurant, Escargot reduces its estimate of the amount of gift cards that will go unused to 8%. During April, gift cards worth $10,000 are used. Prepare any necessary journal entries.

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Chapter 17 Solutions

Intermediate Accounting: Reporting And Analysis
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