Question

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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 $20.1 million in iTunes gift cards in November, and customers redeem $13.1 million of the gift cards in December.

Required:

1. & 2. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5.5 should be entered as 5,500,000).)

1. Record the receipt of cash for gift cards.

2. Record the revenue recognized from redemption of gift cards.

3. What is the ending balance in the Deferred Revenue account? (Enter your answer in dollars, not in millions. (i.e. 5.5 should be entered as 5,500,000).)

Answer 1

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Part 1
Account	Debit	Credit
Cash	$         20.10
Unearned Revenue		$        20.10
(To record receipt of cash for gift cards)
Part 2
Account	Debit	Credit
Unearned Revenue	$         13.10
Sales Revenue		$        13.10
(To record revenue earned)
Part 3
Ending Balance in Deferred Revenue	$            7.00
$20.10-$13.10