Question

Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $20.9 million in iTunes gift cards in November, and customers redeem $13.9 million of the gift cards in December. Required: 1. & 2. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5.5 should be entered as 5,500,000).) View transaction list Journal entry worksheet < 1 2 Record the receipt of cash for gift cards. Note: Enter debits before credits. General Journal Debit Credit Date November 30 Record entry Clear entry View generaliournal

Show transcribed image text

Answer 1

1&2) The required journal entries for the given transactions is shown as follows:-

APPLE INC.

Journal Entries (Amounts in $)

Date	General Journal	Debit	Credit
Nov 30	Cash	20,900,000
	Deferred Revenue		20,900,000
	(To record the cash received for gift cards)
Dec 31	Deferred Revenue	13,900,000
	Sales Revenue		13,900,000
	(To record the redemption of gift cards)

3) Ending Balance in Deferred revenue = $20,900,000 - $13,900,000 = $7,000,000

Therefore ending balance in deferred revenue account is $7,000,000.