Reference no: EM132148437

Question - Texas Roadhouse opened a new restaurant in October. During its first three months of operation, the restaurant sold gift cards in various amounts totaling $2,900. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $520 were presented for redemption during the first three months of operation prior to year-end on December 31. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Texas Roadhouse will remit sales taxes in January.

Required: Record (in summary form) the $2,900 in gift cards sold (keeping in mind that, in actuality, the firm would record each sale of a gift card individually) and the $520 in gift cards redeemed. (Hint: The $520 includes a 4% sales tax of $20.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

1. Record the cash received for gift cards.

2. Record the redemption on gift cards.