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 $370,000. During 2021, Halifax sold merchandise on account for $12,200,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $481,000 in sales for credit, with $266,000 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) merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance 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. Debit Credit Year 2021 General Journal Inventory Inventory-estimated returns Record entry Clear entry View general journal Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b)r merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the actual sales return of merchandise sold during 2021. Note: Enter debits before credits. Debit Credit Year 2021 General Journal Sales returns Accounts receivable Record entry Clear entry View general journal Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance 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 during 2021. Note: Enter debits before credits. Year Debit Credit 2021 General Journal Inventory Cost of goods sold Record entry Clear entry View general journal Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the year-end adjusting entry for estimated returns. Note: Enter debits before credits. Debit Credit Year 2021 General Journal Sales returns Refund liability Record entry Clear entry View general journal Required 1 Required 2 Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) 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
