Exercise 7-8 (Static) Sales returns (L07-4) 3 11/12 points awarded Scored 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 $300,000. During 2021, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% 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? book Required 1 Required 2 1.1/12 points awarded 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 required for a transaction/event, select "No journal entry required" in the first account field.) Scored No General Journal Year 2021 Credit 1 Refund liability Accounts receivable Debit 250,000 eBook 250,000 2 2021 > Inventory Inventory estimated returns 162,500 Print 16.250 3 2021 Sales returns Cost of goods sold 200,000 References 200,000 4 2021 Inventory Cost of goods sold 130,000 130,000 5 2021 Sales returns Refund liability 210,000 210,000 6 2021 Inventory estimated returns Cost of goods sold 136,500 136,500 Required 2 >