Exercise 13-6 (Algo) Gift cards; sales taxes; financial statement effects [LO13-3] Check my work Bavarian Bar and Grill opened for business in November 2024. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $8,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 90% of gift cards are redeemed within one year. Gift cards totaling $2,800 were presented for redemption during 2024 for meals having a total price of $3,200. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be remitted in January. Required: 1. Prepare the appropriate journal entries (in summary form) for the gift cards and meals sold during 2024 (keeping in mind that, in actuality, each sale of a gift card or a meal would be recorded individually). 2. Determine the liability for gift cards to be reported on the December 31, 2024, balance sheet. 3. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2024?
Exercise 13-6 (Algo) Gift cards; sales taxes; financial statement effects [LO13-3] Check my work Bavarian Bar and Grill opened for business in November 2024. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $8,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 90% of gift cards are redeemed within one year. Gift cards totaling $2,800 were presented for redemption during 2024 for meals having a total price of $3,200. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be remitted in January. Required: 1. Prepare the appropriate journal entries (in summary form) for the gift cards and meals sold during 2024 (keeping in mind that, in actuality, each sale of a gift card or a meal would be recorded individually). 2. Determine the liability for gift cards to be reported on the December 31, 2024, balance sheet. 3. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2024?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 13-6 (Algo) Gift cards; sales taxes; financial statement effects [LO13-3]
Check my work
Bavarian Bar and Grill opened for business in November 2024. During its first two months of operation, the restaurant sold
gift cards in various amounts totaling $8,200, mostly as Christmas presents. They are redeemable for meals within two
years of the purchase date, although experience within the industry indicates that 90% of gift cards are redeemed within
one year. Gift cards totaling $2,800 were presented for redemption during 2024 for meals having a total price of $3,200.
The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be
remitted in January.
Required:
1. Prepare the appropriate journal entries (in summary form) for the gift cards and meals sold during 2024 (keeping in
mind that, in actuality, each sale of a gift card or a meal would be recorded individually).
2. Determine the liability for gift cards to be reported on the December 31, 2024, balance sheet.
3. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2024?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdcfb0428-8e62-41c8-9d2b-3e4003f8af75%2Ff8a2d525-b4cc-4b63-a4be-30410853c25f%2F7v2jaow_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 13-6 (Algo) Gift cards; sales taxes; financial statement effects [LO13-3]
Check my work
Bavarian Bar and Grill opened for business in November 2024. During its first two months of operation, the restaurant sold
gift cards in various amounts totaling $8,200, mostly as Christmas presents. They are redeemable for meals within two
years of the purchase date, although experience within the industry indicates that 90% of gift cards are redeemed within
one year. Gift cards totaling $2,800 were presented for redemption during 2024 for meals having a total price of $3,200.
The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be
remitted in January.
Required:
1. Prepare the appropriate journal entries (in summary form) for the gift cards and meals sold during 2024 (keeping in
mind that, in actuality, each sale of a gift card or a meal would be recorded individually).
2. Determine the liability for gift cards to be reported on the December 31, 2024, balance sheet.
3. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2024?
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