Subway is a global food retailer with stores located throughout the world. Suppose a customer at one of its Paris stores purchases a sandwich for €5.00, a brownie for €2.00 and a soft drink for €1.50. The customer pays with cash. (Ignore any potential breakage.)

Required

a. What journal entry will Subway record for this transaction? (Ignore expenses.)

b. Suppose that in addition to the above items, the customer buys a Subway gift card for €50.00. What journal entry would Sub- way record for this transaction?

c. Now suppose that the customer buys the same items listed above, but uses a previously purchased gift card to pay for the purchases. Also assume that there is a sufficient balance on the card to cover the entire cost. What journal entry would Subway make now to record the transaction?

Answer rating: 100% (QA)

a Assuming that Subway uses a perpetual inventory system and r... View the full answer