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In January, 2021, Summit Department Store sells a gift card for $50 and receives cash. In February, 2021, the customer comes back and spends $20 of the gift card to purchase a water bottle. What would be the appropriate journal entry for the customer’s purchase of the water bottle in February? Multiple Choice Debit Deferred Revenue, $50; credit Sales Revenue, $50. No journal entry is necessary. Debit Sales Revenue, $20; credit Deferred Revenue, $20. Debit Deferred Revenue, $20; credit Sales Revenue, $20.

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Answer:

Debit Deferred Revenue, $20; credit Sales Revenue, $20.

Explanation:

The journal entry is shown below:

Deferred revenue Dr $20

      To Sales revenue $20

(Being the purchase of water bottle is recorded)

For recording this we debited the deferred revenue as it decreased the liability and credited the sales revenue as it increased the sales so this entry should be recorded

hence, the last option is correct

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