Review the opening feature of this chapter dealing with Cheezburger Network.

Required
1. Assume that Cheezburger Network sells a $300 gift certificate to a customer, collecting the $300 cash in advance. Prepare the journal entry for the
(a) Collection of the cash for delivery of the gift certificate to the customer and
(b) Revenue from the subsequent delivery of merchandise when the gift certificate is used.
2. How can keeping less inventory help to improve Cheezburger Network’s profit margin?
3. Ben Huh understands that many companies carry considerable inventory, and Ben is thinking of carrying additional inventory of merchandise for sale. Ben desires your advice on the pros and cons of carrying such inventory. Provide at least one reason for and one reason against carrying additional inventory.