The Following Transactions Are for Robert's Western World

question 130

Essay

The following transactions are for Robert's Western World:
(1) In December, customers purchased $5,000 of gift cards (for goods) from Robert's.
(2) At December 31, gift cards totaling $2,200 remained unused.
(3) Robert's took a physical count of its inventory and determined the correct value of inventory should Required:
(a) Prepare journal entries for the three transactions. Ignore Cost of Goods Sold.
(b) What is reported in the 12/31 balance sheet as a result of items (1) and (2) above?
(c) What amount is reported as Inventory in the 12/31 balance sheet?

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Definitions:

Non-Controlling Interest

A portion of the equity in a subsidiary not owned by the parent company, typically shown separately in the consolidated financial statements.

Net Income

The total earnings of a company after deducting all expenses and taxes from revenue, indicating the company's profit.

Intercompany Profit

Profits that arise from transactions between companies under common control, which may need to be eliminated in consolidated financial statements.

Unrealized Profits

Gains on transactions that have occurred but have not yet been realized through the receipt or payment of cash.