Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to...

Transcribed Image Text:

Halifax Manufacturing allows its customers to return merchandise for any reason 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 $300,000. During 2024, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. 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. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Year 1 2024 Refund liability Accounts receivable 24 2024 Inventory 3 2024 General Journal Inventory-estimated returns Sales returns Accounts receivable 4 2024 Inventory Cost of goods sold 5 2024 Sales returns Refund liability 6 2024 Inventory-estimated returns Cost of goods sold Required 1 Required 2 Debit 250,000 Credit 250,000 >> 00 162.500 162.500 200,000 200,000 130,000 130,000 What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability Show less Halifax Manufacturing allows its customers to return merchandise for any reason 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 $300,000. During 2024, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. 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. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Year 1 2024 Refund liability Accounts receivable 24 2024 Inventory 3 2024 General Journal Inventory-estimated returns Sales returns Accounts receivable 4 2024 Inventory Cost of goods sold 5 2024 Sales returns Refund liability 6 2024 Inventory-estimated returns Cost of goods sold Required 1 Required 2 Debit 250,000 Credit 250,000 >> 00 162.500 162.500 200,000 200,000 130,000 130,000 What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability Show less

Answer rating: 100% (QA)

The image shows an accounting problem that involves recording actual returns and adjusting the refund liability It mentions that Halifax Manufacturing ... View the full answer