At the beginning of the current soccer season, on May 1, 2021, Fullback Sports has 100 soccer balls in inventory at $10 each. The company uses a perpetual inventory system and the contract- based approach for revenue recognition. Based on past experience, Fullback’s management estimates returns at 20% of sales and has a stated return policy of 15 days from the date of sale. The following sales transactions occurred in May:

May 5 Sold 15 soccer balls to Wolverine Soccer Club for $20 each, n/30.

7 Wolverine Soccer Club returned three of the balls after determining it had purchased more balls than it needed. Fullback gave Wolverine a credit on its account and returned the balls to inventory.

10 Sold 30 balls at $20 each to cash customers.

12 Six of the balls purchased for cash on May 10 were returned for cash because they were damaged. The balls were scrapped.

17 Sold 25 balls to Spectre Community Club for $20 each, n/30.

31 Collected cash from Wolverine Soccer Club for the amount owing.

Instructions

a. Record the transactions for the month of May for Fullback Sports.

b. Create T accounts for Sales, Cost of Goods Sold, Merchandise Inventory, Estimated Inventory Returns, and Refund Liability. Post the opening balance for Merchandise Inventory and May’s transactions, and calculate the May 31 balances.