Question

Vail is one of the largest ski resorts in the United States. Suppose that on October 1, 2021, Vail sells gift cards (lift passes) for $100,000. The gift cards are redeemable for one day of skiing during the upcoming winter season. The gift cards expire on April 1, 2022. Customers redeem gift cards of $20,000 in December, $30,000 in January, $25,000 in February, and $15,000 in March.

1. Record the sale of gift cards on October 1, 2021.2. Record the redemption of gift cards as of December 31, 2021.3.Record the redemption of gift cards in 2022 by preparing a summary entry as of March 31, 2022.4.Record the redemption of gift cards in 2022 by preparing a summary entry as of March 31, 2022.

Answer 1

Answer:

Vail Journal entries

Oct 1,2021

Dr Cash 100,000

Cr Deferred Revenue 100,000

December 31,2021

Dr Deferred Revenue 20,000

Cr Sales Revenue 20,000

January 2022

Dr Deferred Revenue 30,000

Cr Sales Revenue 30,000

February 2022

Dr Deferred Revenue 25,000

Cr Sales Revenue 25,000

March 2022

Dr Deferred Revenue 15,000

Cr Sales Revenue 15,000

Explanation:

Deferred revenue are can be seen as the amount of money which is been earned for good and service which are yet to be delivered which is why it is often recorded as a liability until the delivery of good and service has taken place in which it will then be converted into revenue or asset.

Sales revenue can be seen income which is been received by a company or organisation for service rendered.

Answer 2

The journal entries in the books of Vail to record the sale and redemption of gift cards are as follows:

Journal Entries:

1. October 1, 2021

Debit Cash $100,000

Credit Gifts Cards Redeemable $100,000

• To record the sale of gift cards.

2. December 31, 2021

Debit Gifts Cards Redeemable $20,000

Credit Sales Revenue $20,000

• To record the redemption of gift cards.

3. March 31, 2022

Debit Gifts Cards Redeemable $70,000

Credit Sales Revenue $70,000

• To record the summary of gift cards redeemed in 2022.

4. March 31, 2022

Debit Gifts Cards Redeemable $70,000

Credit Sales Revenue $70,000

• To record the summary of gift cards redeemed in 2022.

Data Analysis:

October 1, 2021 Cash $100,000 Gifts Cards Redeemable $100,000

December 31, 2021 Gifts Cards Redeemable $20,000 Sales Revenue $20,000

January 31, 2022 Gifts Cards Redeemable $30,000 Sales Revenue $30,000

February 28, 2022 Gifts Cards Redeemable $25,000 Sales Revenue $25,000

March 31, 2022 Gifts Cards Redeemable $15,000 Sales Revenue $15,000

March 31, 2022 Gifts Cards Redeemable $70,000 Sales Revenue $70,000

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