Adjusting entry for customer refunds, allowances, and returns

Scott Company had sales of $$12,350,000$ and related cost of goods sold of $$7,500,000$

for the year ending December $31,20$Y$8.$ Scott provides customers a refund for any

returned or damaged merchandise. Scott Company estimates that customers will

request refunds for $0\mathrm{.}8\%$ of sales and estimates that merchandise costing $$48,000$ will

be returned in $20$ Y $9.$

Journalize the adjusting entries on December $31,20$Y$8,$ to record the expected

customer returns. If an amount box does not require an entry, leave it blank.

$20$Y$8$ Dec. $31$

$$

x

$20$ Y Dec. $31$

$x$

$x$

$x$

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At the end of the accounting period as part of the adjusting process, A current

asset account for the estimated amount of merchandise that will be returned by

customers is used as well as a liability account to estimate refunds that will be

paid to customers.