BuyFindarrow_forward

Intermediate Accounting: Reporting...

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

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
26 views

Unearned Revenue: Gift Certificates On December 5, 2019, Super Circuit Store sold gift certificates totaling $12,000. By December 31, 2019, all but $2,125 worth of these certificates had been redeemed for merchandise. Outstanding certificates were then redeemed by January 15, 2020.

Required:

  1. 1. Prepare journal entries on Super Circuit’s books to reflect the preceding transactions.
  2. 2. How would the gift certificates be reported on Super Circuit’s balance sheet on December 31, 2019?

1.

To determine

Prepare journal entry to record the given transaction.

Explanation

Liabilities:

The claims creditors have over assets or resources of a company are referred to as liabilities. These are the debt obligations owed by company to creditors. Liabilities are classified on the balance sheet as current liabilities and long-term liabilities.

Prepare journal entry to record the given transaction.

DateAccount Titles and explanationDebit ($)Credit ($)
December 5, 2019Cash 12,000 
      Unearned revenue  12,000
 (To record the  cash to be received on sale of  gift certificates)  

Table (1)

  • Cash is an asset and there is an increase in the value of an asset. Hence, debit the cash by $12,000.
  • Unearned revenue is a liability and there is an increase in the value of liability. Hence, credit the unearned revenue by $12,000.
DateAccount Titles and explanationDebit ($)Credit ($)
December 31, 2019Unearned revenue [$12,000

2.

To determine

State the manner by which Company S will report the gift certificated in its balance sheet on December 31, 2019.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Describe the connection between planning, feedback, and controlling.

Managerial Accounting: The Cornerstone of Business Decision-Making

Why is sales forecasting important?

Foundations of Business (MindTap Course List)

Suppose a firm makes the following policy changes. If the change means that external nonspontaneous financial r...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)