Determine the balance in the unearned revenue account

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Reference no: EM131521548

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 $2,500. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $728 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: 1. Record (in summary form) the $2,500 in gift cards sold (keeping in mind that, in actuality, the firm would record each sale of a gift card individually).

2. Record the $728 in gift cards redeemed, including the 4% sales tax assessed.

3. Determine the balance in the Unearned Revenue account (remaining liability for gift cards) Texas Roadhouse will report on the December 31 balance sheet.

Reference no: EM131521548

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