Merchandise Inventory Adjustments: Periodic Inventory system with Sales Returns and Allowances

The following partial worksheet is taken from Karens Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is $60,000. Karen estimates that customers will be granted $15,000 in refunds next year for merchandise sold this year. The estimated cost of the returned inventory is $10,000.

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1. Complete the Adjustments columns for Merchandise Inventory and related accounts.

2. Extend all accounts to the Adjusted Trial Balance columns.

Karens Gift Shop End-of-Period Spreadsheet (Partial) For Year Ended December 31, 20--
ACCOUNT TITLE	TRIAL BALANCE			ADJUSTMENTS			ADJUSTED TRIAL BALANCE
	DEBIT	CREDIT		DEBIT	CREDIT		DEBIT	CREDIT
Merchandise Inventory	55,000.00
Estimated Returns Inventory	8,000.00
Customer Refunds Payable		12,000.00
Income Summary
Sales		280,000.00
Sales Returns & Allowances	18,000.00
Purchases	200,000.00
Purchases Returns & Allowances		3,000.00
Purchases Discounts		2,500.00
Freight-In	1,400.00

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3. Prepare the cost of goods sold section from the spreadsheet.

Karen's Gift Shop Income Statement For Year Ended December 31, 20--

Cost of goods sold:
Cost of goods sold