Determine the balance in the unearned revenue account

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Logan’s Roadhouse opened a new restaurant in November. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $2,000. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $742 were presented for redemption during the first two months of operation prior to year-end on December 31. The sales tax rate on restaurant sales is 6%, assessed at the time meals (not gift cards) are purchased. Logan’s will remit sales taxes in January.

Record (in summary form) the $2,000 in gift cards sold (keeping in mind that, in actuality, each sale of a gift card or a meal would be recorded individually). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the $742 in gift cards redeemed. (Hint: The $742 includes a 6% sales tax of $42.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Determine the balance in the Unearned Revenue account (remaining liability for gift cards) to be reported on the December 31 balance sheet.

Reference no: EM131211366

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