Bavarian Bar and Grill opened for business in November 2021. During its first two months of operation, the restaurant sold gift cards in var

Bavarian Bar and Grill opened for business in November 2021. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $5,800, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 70% of gift cards are redeemed within one year. Gift cards totaling $1,600 were presented for redemption during 2021 for meals having a total price of $2,000. 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.

0 thoughts on “Bavarian Bar and Grill opened for business in November 2021. During its first two months of operation, the restaurant sold gift cards in var”

  1. Answer: $80

    Explanation:

    Total sales of gift cards for 2 months = $5,800

    redeemable within 2 years of purchase date

    assumed the percentage of gift cards are redeemed within one year

    = 70% of $5,800 = $4,060

    Actual gift card redeemed in 2021 = $1,600

    Actual sales of gift card redeemed = $2,000

    Balance of gift card not redeemed = $2,000 – $1,600 = $400

    sales tax rate = 4%

    accessed on $2,000 *4%

    = $80

    Sales tax to be remitted in January for sales in November = $80

    Reply

Leave a Comment

twenty ÷ = 2