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At December 31, 2020, Sharon's boutique had 2050 gift certificates outstanding, which had been sold to...

At December 31, 2020, Sharon's boutique had 2050 gift certificates outstanding, which had been sold to customers during 2020 for $70 each. Sharon's operates on a gross profit of 60% of its sales. What amount of revenue pertaining to the 2050 outstanding gift certificates should be deferred at December 31, 2020?

A. $143,500

B. $0

C. $57,400

D. $86,100

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Answer #1

ANSWER-A

EXPLANATION

THE AMOUNT DEFERRED THAT IS UNEARNED INCOME OF THE MONTH OF 2020 IS 2050 GIFT CERTIFICATE WHICH WORTH $1435000 SO THIS AMOUNT SHOULD BE DEFFERED.

2050 GIFT CERTTICATE*$70 EACH=$143500

ENTRY WHOULD BE

SALES REVENUE  DEBIT BY $143500 TO DEFERRED/UNEARNED REVENUE CREDIT BY $143500

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