ANSWER Parts B-E

Recording Sales with Expected Returns February 1 of the next year. Novelty estimates total returns to be 30% of sales, originally made on account. All sales are on credit. Novelty uses the perpetual inventory system. Required Prepare the following entries, including the sales and cost of goods sold entry for each requirement. a. Prepare the current year sales journal entries. b. Record actual returns in the current year. Assume actual returns are on credit. c. Record estimated returns on December 31 of the current year. d. Record actual returns in January of the next year. Assume actual returns are on credit. e. Record adjusting entries at year end. To record cost of estimated sales returns d. Sales Returns Accounts Receivable To record sales returns Interest Revenue Sales Returns 77,8800077,880 To record cost of sales returns e. Inventory Cost of Goods Sold To adjust sales returns for refund liability. To adjusted cost of goods sold for refund liability