Exercise 7-8 (Algo) Sales returns (L07-4) Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $440,000. During 2021, Halifax sold merchandise on account for $12,900,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $630,000 in sales for credit, with $347.000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021: (b) record actual returns in 2021 of merchandise that was sold during 2021; 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? COS Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end. (If no entry is requi for a transaction/event, select "No journal entry required in the first account field.) Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end. (If no entry is requir for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 Record the actual sales return of merchandise sold prior to 2021. Note: Enter debits before credits Debit Credit General Journal Year 2021 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at yea for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the cost of merchandise returned for goods sold prior to 2021. Note: Enter debits before credits. Year General Journal Debit Credit 2021 cul actual returns in 2021 of merchandise that was sold prior to 2021; erchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate bala a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (L merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balanc for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet
