Question

Please provide the information required below and show your work for your answers. Round all amounts to the nearest dollar. Circle the appropriate answer when choices are provided. 1. (16 pts) The following selected transactions pertain to United Corporation in 2021. United’s fiscal year ends on December 31.  On August 1, United sold custom-made small electronics with invoice price of $280,000 to a corporate customer. The products are backed with a 3-month warranty. The customer paid extra $3,000 for additional 12-month extended warranty.  On September 1, supported by the company’s $1 million revolving credit line, $400,000 of commercial paper were issued on a nine-month note. Interest was discounted at issuance at a 9% discount rate.  United started opened a restaurant in mid-December. The restaurant sold gift cards in various amounts totaling $7,400. They are redeemable for meals within two years of the purchase date; it is estimated that 80% of gift cards are redeemed within one year. Gift cards totaling $2,400 were presented for redemption during 2021 for meals having a total price of $2,800. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be remitted in January. United recorded the sales of gift cards immediately at the time of sale but didn’t record any of the redemption of gift cards before year end.

(a) Prepare all the entries required on Dec 31,2021 for the transactions above
(b) on the balance sheet dated Dec 31, 2021, for the above transactions United would report for the aforementioned transactions $________________ current liabilities in total

Answer 1

- Total liability Uneaned Revenue. Gift card liability $2500 $500 a Cuorent liability sales tax payable Uneamed revenue Gift Car lability [ $7400X80% - $2400) 9112 $ 2500 $3520 $6732

De 83) Uneamed Revenue $500 Wanrcuity Revenue $500. Interest expense $3000 Decal discount on $3000 notes payable { $388000 x 9.2783% *427 Dec 3) Cash $512 ($2912-82400) Gift certificate liability $2400. Sales Revenue $2800 Sales taxpayable. $112 (Record redemption)