Question
1. In January 2024, Summit Department Store sells a gift card for $50 and receives cash. In February 2024, the customer comes back and spends
1.
In January 2024, Summit Department Store sells a gift card for $50 and receives cash. In February 2024, the customer comes back and spends $20 of the gift card to purchase a water bottle. What would be the appropriate journal entry for the sale of the gift card in January?
Multiple Choice
Debit Sales Revenue, $20; credit Cash, $20
Debit Cash, $50; credit Sales Revenue, $50
Debit Cash, $50; credit Deferred Revenue, $50
No journal entry is necessary.
2.
When a company delivers a product or service for which a customer has previously paid, the company records a debit to a(n):
Multiple Choice
Revenue account and a credit to an asset account.
Asset account and a credit to a revenue account.
Liability account and a credit to a revenue account.
Revenue account and a credit to a liability account.
3.
On November 1, 2024, a company signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2025. What effect does receiving cash and signing a note have on the financial statements?
Multiple Choice
Assets increase and liabilities increase.
Assets increase and expenses increase.
Assets increase and stockholders equity increases.
Assets increase and stockholders equity decreases.
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