Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribed

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 $410,000. During 2021, Halifax sold merchandise on account for $13,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $532,000 in sales for credit, with $294,000 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? 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 required for a transaction/event, select "No journal entry required" in the first account field.) No Year Debit Credit 2021 General Journal Refund liability Accounts receivable 294,000 294,000 2021 191,100 Inventory Inventory-estimated returns 191,100 2021 238,000 Sales returns Accounts receivable 238,000 2021 154,700 Inventory Cost of goods sold 154,700 2021 Sales returns Refund liability 2021 Inventory-estimated returns Cost of goods sold Required 1 Required 2 What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability $ 186,000 X

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Accounting Volume 1 Financial Accounting

Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, OpenStax

1st Edition

1593995946, 978-1593995942

More Books

Students also viewed these Accounting questions

Question

List and explain four levels of communication.

Answered: 1 week ago

Question

3. On the playground, raise a hand or whistle to indicate Line up.

Answered: 1 week ago