Costco sells merchandise to customers. Cost is 70% of the selling price. Costco uses a gross method to account for discount on early payments of accounts receivables. The terms for all ARs are 2/10, n/30. Industry experience indicates that 10% of annual gross sales will be returned. Merchandise becomes unreturnable after 4 months.

In 2021, the beginning inventory for Costco was $8,000,000. Costco’s sales transactions during 2021-2023 are as follows:

2021
	The beginning inventory was:	$8,000,000
5/1/2021	Sold customer A on account merchandise for:	$4,000,000
5/5/2021	Customer A paid a half of the AR balance.	$2,000,000
5/20/2021	Customer A paid the remaining AR balance of:	$2,000,000
6/15/2021	Customer A returned merchandise of:	$300,000
11/1/2021	Sold customer B on account merchandise for:	$3,000,000
11/7/2021	Customer B paid the AR balance in full.	$3,000,000
12/31/2021	Established allowance for merchandise return.
2022
1/15/2022	Customer B returned merchandise of:	$30,000
6/30/2023	Purchased inventory in cash:	$9,000,000
12/1/2022	Sold Customer C on account merchandise for:	$7,000,000
12/15/2022	Customer C returned merchandise of:	$50,000
12/31/2022	Established allowance for uncollectible accounts for 30% of the remaining AR balance.
12/31/2022	Established allowance for merchandise return.
2023
12/1/2023	Customer C went bankrupt
	and the remaining AR will not be collectible

1. Construct the following table.
2. Prepare journal entries for 2021-2023

Allowance for uncollectible accounts	2021	2022	2023
Desired ending balance
Beginning balance
Change made during the year
Change to be made year end

Balance Sheet Acct Balances		2021	2022	2023
Asset	Inventory
	Inventory-estimated returns
	Net Inventory
	Accounts Receivable
	less: Allowance for uncollectible accounts
	Net Accounts Receivable
Liability	Refund Liability

Answer rating: 100% (QA)

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