Halifax Manufacturing allows customers to return merchandise for any reason up to 90 days after delivery and
Question:
Halifax Manufacturing allows customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All Halifax sales are on credit (no cash is collected at the time of sale). The company began 2016 with a provision for sales returns of $490,000. During 2016, Halifax sold merchandise on account for $13,400,000. This merchandise cost Halifax $8,710,000 (65% of sales prices). Also during the year, customers returned $661,000 in credit sales. Sales returns, estimated at 5% of sales, are recorded as an adjusting entry at the end of the year. |
Required: |
1. | Prepare the entry to record merchandise returns and the year-end adjusting entry for estimated returns. Note: Record estimated returns in net amounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Record actual sales returns. 2. Register the return of merchandise to stock. 3. Record the year-end adjustment entry for the estimated returns. 4. Record the adjusting entry for the estimated return of goods to inventory.
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Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas