Question

Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $19.3 million in iTunes gift cards in November, and customers redeem $12.3 million of the gift cards in December. and customers redeem $12.7 million of the gift cards.

Record the necessary entries in the Journal Entry Worksheet below.

Record the receipt of cash for gift cards.

Record the revenue earned from redemption of gift cards.

What is the ending balance in the unearned revenue account?

Answer 1

Answer:

cash                       19,300,000 debit

      unearned revenues                 19,300,000 credit

unearned revenues      12,700,000 credit

     sales revenues                    12,700,000 credit

balance:

19,300,000 - 12,700,000 = 6,600,000 balance

Explanation:

the gift card will be considered a liaiblity as it generates an obligation to Apple to latter provide their services/goods.

Once the gift card are redeem the company is able to recognize revenue as it has provided the goods to the customers.