Big 5 Sporting Goods, a sporting goods retailer headquartered in El Segundo, California with 434 stores...

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Big 5 Sporting Goods, a sporting goods retailer headquartered in El Segundo, California with 434 stores in Arizona, California, Colorado, Idaho, Nevada, New Mexico, and Wyoming. Big 5 Sporting Goods allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Big 5 Sporting Goods's sales are for credit (no cash is collected at the time of sale). Big 5 Sporting Goods began the current year with a refund liability of $340,000. During the current year, Big 5 Sporting Goods sold merchandise on account for $11,600,000. Big 5 Sporting Goods' merchandise costs are 75% of merchandise selling price. Also during the year, customers returned $575,000 in sales for credit, with $319,000 of those being returns of merchandise sold prior to the current year, and the rest being merchandise sold during the current year. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. For Big 5 Sporting Goods: please prepare entries to (a) record actual returns in the current year of merchandise that was sold prior to the current year; (b) record actual returns in the current year of merchandise that was sold during the current year. 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?

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