Exercise $7-8($Algo$)$ Sales returns $[$LO$7-4]$

Halifax Manufacturing allows its customers to return merchandise for any reason up to $90$ days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit $($no cash is collected at the time of sale$).$ The company began $2024$ with a refund liability of $$390,000.$ During $2024,$ Halifax sold merchandise on account for $$12,400,000.$ Halifax's merchandise costs are $65\%$ of merchandise selling price. Also during the year, customers returned $$368,000$ in sales for credit, with$$$$203,000$ of those being returns of merchandise sold prior to $2024,$ and the rest being merchandise sold during $2024.$ Sales returns, estimated to be $3\%$ of sales, are recorded as an adjusting entry at the end of the year.

Required:

Prepare entries to $($a$)$ record actual returns in $2024$ of merchandise that was sold$$prior to$2024$; $($b$)$ record actual returns in $2024$ of merchandise that was sold$$during$2024$; and $($c$)$ adjust the refund liability to its appropriate balance at year end.

What is the amount of the year$-$end refund liability after the adjusting entry is recorded? $(1)$

Gheck my work mode: This shows what is correct or incorrest for the work you hav

nplete this question by entering your answers in the tabs below.

uired $1$

Required $2$

Jare entries to $($a$)$ record actual returns in $2024$ of merchandise that was sold prior to $2024$; $($b$)$ record actual re $4$ of merchandise that was sold during $2024$; and $($c$)$ adjust the refund liability to its appropriate balance at year e: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline Year & $\backslash$multicolumn$\{2\}\{|$c$|\}\{$General Journal$\}$ & Debit & Credit $\backslash \backslash$

$\backslash$hline $2024$ & Refund liability & $(2)$ & $203,000\backslash (\backslash$cdot $\backslash )$ & $\backslash \backslash$

$\backslash$hline & Accounts receivable & $(2)$ & & $203,0000\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline $2024$ & Inventory & $(2)$ & & $\backslash \backslash$

$\backslash$hline & Inventory$-$estimated returns & $(2)$ & & $\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline $2024$ & Sales returns & $(2)$ & $165,0000$ & $\backslash \backslash$

$\backslash$hline & Accounts receivable & $(2)$ & & $165,0000\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline $2024$ & Inventory & $($D$)$ & & $\backslash \backslash$

$\backslash$hline & Cost of goods sold & $()$ & & $\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline $2024$ & Sales returns & $0$ & & $\backslash \backslash$

$\backslash$hline & Refund liability & $($ & & $\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline $2024$ & Inventory$-$estimated returns & $0$ & & $\backslash \backslash$

$\backslash$hline & Cost of goods sold & $()$ & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Preve.

$4$ of $10$

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