Part A : \"Fanger Industries sells gift cards that are redeemable in merchandise

Question

Part A : "Fanger Industries sells gift cards that are redeemable in merchandise. Fanger sold gift certificates for the first time in 2018. During 2018, Fanger sold gift certificates for $108,000. Merchandise with the total price of $65,000 was redeemed during the year. For Fanger, the cost of the merchandise sold was $40,000. The entry recording the sale of the gift certificates included an increase to"

"Sales revenue for $108,000"

"Unearned revenue $108,000"

"Cost of goods sold for $108,000"

"Accounts payable for $108,000"

Part B:

"Fanger Industries sells gift cards that are redeemable in merchandise. Fanger sold gift certificates for the first time in 2018. During 2018, Fanger sold gift certificates for $98,000. Merchandise with the total price of $65,000 was redeemed during the year. For Fanger, the cost of the merchandise sold was $40,000. Assuming that Fanger uses the perpetual inventory method, the journal entry recording the redemption of the gift certificates during 2018 will include: "

"A decrease to Deferred Revenue for $25,000"

"A decrease to Deferred Revenue for $98,000"

"An increase to Cost of Goods Sold for $25,000"

"An increase to Sales for $65,000"

"Sales revenue for $108,000"

"Unearned revenue $108,000"

"Cost of goods sold for $108,000"

"Accounts payable for $108,000"

Explanation / Answer

Part A

Answer is

b. "Unearned revenue $108,000"

Part B

Answer is

d. "An increase to Sales for $65,000"

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