Novelty Inc. developed a new product in 2020 and its financial results follow. To increase acceptance...

   

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Novelty Inc. developed a new product in 2020 and its financial results follow. To increase acceptance by retailers, Novelty sold the product to retailers with an unconditional right of return, which expires on February 1, 2021. Novelty estimates returns to be 30%. All sales are on credit. Novelty uses the perpetual inventory system Sales Value Cost Value Sales in 2020 $144,000 $96,000 Returns of 2020 sales in 2020 9,600 6,400 Returns of 2020 sales in January 2021 12,000 8,000 a. Prepare the 2020 sales journal entries for Novelty Inc. b. Record actual returns in 2020. Assume actual returns are on credit. c. Record estimated returns on December 31, 2020. d. Record actual returns in 2021(for January) and any required adjusting entries. Assume actual returns are on credit. Novelty Inc. developed a new product in 2020 and its financial results follow. To increase acceptance by retailers, Novelty sold the product to retailers with an unconditional right of return, which expires on February 1, 2021. Novelty estimates returns to be 30%. All sales are on credit. Novelty uses the perpetual inventory system Sales Value Cost Value Sales in 2020 $144,000 $96,000 Returns of 2020 sales in 2020 9,600 6,400 Returns of 2020 sales in January 2021 12,000 8,000 a. Prepare the 2020 sales journal entries for Novelty Inc. b. Record actual returns in 2020. Assume actual returns are on credit. c. Record estimated returns on December 31, 2020. d. Record actual returns in 2021(for January) and any required adjusting entries. Assume actual returns are on credit.

Answer rating: 100% (QA)

No Particular Debit Credit d Refund Liability ... View the full answer