A company is the number one online music retailer through its iTunes music store. The company...
A company is the number one online music retailer through its iTunes music store. The company sells iTunes gift cards in $15, $25, and $50 increments. Assume the company sells $19.7 million in iTunes gift cards in November, and customers redeem $12.7 million of the gift cards in December.
1. & 2. Record the necessary entries in the Journal Entry Worksheet
1. Record the receipt of cash for gift cards.
2. Record the revenue recognized from redemption of gift cards.
Homework Answers
Solution :
| Entry No. | Account | Debit | Credit |
| 1. (Nov. 30) | Cash | $ 19,700,000 | |
| Deferred Revenue | $ 19,700,000 | ||
| (To record the cash received from sale of gift cards) | |||
| 2. (Dec, 31) | Deferred Revenue | $ 12,700,000 | |
| Sales Revenue | $ 12,700,000 | ||
| (To record the redemption of Gift Cards) |
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