On July 1, 2021, a company sells $2,000 of gift cards to customers. The gift cards expire one year from the date of sale. By December 31, 2021, $1,600 of the gift cards have been redeemed. What is the appropriate balance in the Deferred Revenue account on December 31, 2021?
A) $2,000.
B) $1,800.
C) $1,600.
D) $400.
Answer: D
On October 1, 2021, a company sells $800 of gift cards to customers. The gift cards expire one year from the date of sale. By October 1, 2022, $750 of the gift cards have been redeemed and the sales recorded at the time of redemption. What entry, if any, should the company record on October 1, 2022?
A) Debit Deferred Revenue, $50 credit Sales Revenue, $50.
B) Debit Sales Revenue, $50 credit Cash, $50.
C) Debit Cash, $750 credit Sales Revenue, $750.
D) No journal entry is necessary.
Answer: A
Sales taxes collected by a company on behalf of the state and local governments are recorded by:
A) A debit to an expense account.
B) A credit to a revenue account.
C) A debit to a revenue account.
D) A credit to a liability account.
Answer: D
