Chico Company allows its customers to return merchandise within 30 days of purchase At December 31, the end of its first year of operations, Chico estimates future period merchandise returns of $60,000 (cost of $22,500) related to its current-year sales. A few days later, on January 3, a customer returns merchandise with a selling price of $2,000 for a cash refund, the returned merchandise cost $750 and is returned to inventory as it is not defective . o. Prepare the December 31 year-end adjusting journal entry for estimated future sales returns and allowances (revenue side) b. Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). c. Prepare the January 3 journal entries to record the merchandise returned. View transaction list Journal entry worksheet 1 2 3 4 Record the adjusting entry for estimated future sales returns and allowances (revenue side) Journal entry worksheet 2 3 Interest receivable Inventory returns estimated s and allowances Record the (revenue sig Land Note: Enter debi Merchandise inventory Miscellaneous expenses Other expenses Date Debit Credit Dec 31 Record entry Clear entry View general journal Journal entry worksheet Sales s and allowances Record the (revenue si Sales discounts Sales refund payable Note: Enter debi Sales returns and allowances Transportation-in Debit Credit Date Dec 31 Record entry Clear entry View general journal Journal entry worksheet