Georgia's Salon
The salon sells $50,000 of gift cards in May 2013. These gift cards may be used anytime before their expiration on May 31, 2014.
-Refer to Georgia's Salon. On May 31, 2013, all but $1,500 of the gift cards had been redeemed for salon services. Which of the following is the correct journal entry to record for the expired gift cards?

Question

Quizplus · Accepted Answer

The salon received $50,000 for the gift cards sold in May 2013. However, on May 31, 2013, all but $1,500 worth of gift cards had been redeemed. This means that $1,500 worth of gift cards will expire and the corresponding revenue should be recognized. The correct journal entry to record the expiration of gift cards is to debit Unearned Sales Revenue for $1,500 (to reduce the liability for unearned revenue) and credit Sales Revenue for $1,500 (to recognize the revenue). Therefore, the correct choice is B.

Georgia's Salon The Salon Sells $50,000 of Gift Cards in May 2013