Question
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
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 $320,000. During 2021, Halifax sold merchandise on account for $11,700,000. Halifax's merchandise costs is 75% of merchandise selling price. Also during the year, customers returned $460,000 in sales for credit, with $255,000 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?
for 1.
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Record the actual sales return of merchandise sold prior to 2021.
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2
Record the cost of merchandise returned for goods sold prior to 2021.
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3
Record the actual sales return of merchandise sold during 2021.
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4
Record the cost of merchandise returned for goods sold during 2021.
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5
Record the year-end adjusting entry for estimated returns.
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6
Record the adjusting entry for the estimated return of merchandise to inventory.
for 2. What is the amount of the year-end refund liability after the adjusting entry is recorded?
thanks so much for the help
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