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 2024 with a refund liability of $420,000. During 2024, Halifax sold merchandise on account for $12,700,000. Halifax's merchandise costs are 60% of merchandise selling price. Also during the year, customers returned $619,000 in sales for credit, with$342,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. 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 2024 of merchandise that was soldprior to2024; (b) record actual returns in 2024 of merchandise that was soldduring2024; 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?____________

1Record the actual sales returns of merchandise sold prior to 2024.

• 2Record the cost of merchandise returned for goods sold prior to 2024.
• 3Record the actual sales returns of merchandise sold during 2024.
• 4Record the cost of merchandise returned for goods sold during 2024.
• 5Record the year-end adjusting entry for estimated returns.
• 6Record the adjusting entry for the estimated returns of merchandise to inventory.