Question: Logan's Roadhouse opened a new restaurant in November. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $1,800. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $689 were presented for redemption during the first two months of operation prior to year-end on December 31. The sales tax rate on restaurant sales is 6%, assessed at the time meals (not gift cards) are purchased. Logan's will remit sales taxes in January.
Required: 1. Record (in summary form) the $1,800 in gift cards sold (keeping in mind that, in actuality, each sale of a gift card or a meal would be recorded individually).
2. Record the $689 in gift cards redeemed, including the 6% sales tax assessed.
3. Determine the balance in the Unearned Revenue account (remaining liability for gift cards) to be reported on the December 31 balance sheet.