Exas roadhouse opened a new restaurant in october. during its first three months of operation, the restaurant sold gift cards in 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. & 2. 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) and the $728 in gift cards redeemed. (hint: the $728 includes a 4% sales tax of $

The journal entries are as follows:

1. Cash A/c                    Dr. $3,500

To Unearned revenue                    $3,500

(To record gift cards sold)

2. Unearned revenue A/c    Dr. $728

To Sales tax payable A/c                      $28            

To sales revenue                                   $700

(To record gift cards redeemed)

Note : The $728 includes a 4% sales tax of $28.

General JournalDebitCredit

1Cash2600  

Unearned revenue  2600

(To record gift cards sold)  

2Unearned revenue832  

Sales tax payable  32

Sales revenue  800

(To record gift cards redeemed)

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answer; competency based pay;