Lacey Company recorded credit sales of $1,600,000 for the current year ended December 31. During the...

 

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Lacey Company recorded credit sales of $1,600,000 for the current year ended December 31. During the current year, the company recorded actual returns of $20,000. As of December 31, Lacey estimates sales returns at 3% of current year sales, originally made on account. It is the company's policy to provide refunds on account. Lacey uses a perpetual inventory system and records estimated returns at the end of the period. The balance in Refund Liability was $14,400 and the balance in Inventory-Estimated Returns was $5,760 on January 1 of the current year. a. Prepare the journal entries to record sales and cost of goods sold for the current year. Assume all sales are on account and cost of goods sold is 40% of the selling price. b. Prepare the journal entries to record actual returns during the current year. Include the cost of goods sold entry. c. Prepare the adjusting entries related to estimated returns on December 31. Include the cost of goods sold entry. Lacey Company recorded credit sales of $1,600,000 for the current year ended December 31. During the current year, the company recorded actual returns of $20,000. As of December 31, Lacey estimates sales returns at 3% of current year sales, originally made on account. It is the company's policy to provide refunds on account. Lacey uses a perpetual inventory system and records estimated returns at the end of the period. The balance in Refund Liability was $14,400 and the balance in Inventory-Estimated Returns was $5,760 on January 1 of the current year. a. Prepare the journal entries to record sales and cost of goods sold for the current year. Assume all sales are on account and cost of goods sold is 40% of the selling price. b. Prepare the journal entries to record actual returns during the current year. Include the cost of goods sold entry. c. Prepare the adjusting entries related to estimated returns on December 31. Include the cost of goods sold entry.