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 $380,000. During 2021, Halifax sold merchandise on account for $12,300,000. Halifax's merchandise costs it 70% of merchandise selling price. Also during the year, customers returned $603,000 in sales for credit, with $333,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. 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 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?

1. Record the actual sales return of merchandise sold prior to 2021.

2. Record the cost of merchandise returned for goods sold prior to 2021.

3. Record the actual sales return of merchandise sold during 2021.

4. Record the cost of merchandise returned for goods sold during 2021.

5. Record the year-end adjusting entry for estimated returns.

6. Record the adjusting entry for the estimated return of merchandise to inventory.

Credit Year 2021 General Journal Refund liability Accounts receivable Debit 333,000 333,000 2021 233,100 Inventory Inventory-estimated returns 233,100 2021 270,000 Sales returns Accounts receivable 270,000 2021 189,000 Inventory Cost of goods sold 189,000 2021 603,000 X Sales returns Refund liability 603,000 2021 422,100 X Inventory-estimated returns Cost of goods sold 422,100 X