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

The following partial work sheet is taken from Karen's 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.

1. Complete the Adjustments columns for Merchandise Inventory and related accounts.
2. Extend all accounts to the Adjusted Trial Balance columns.
3. prepare the cost of goods sold section from the spread sheet.

ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT Merchandise Inventory 55,000.00 X Estimated Returns Inventory Customer Refunds Payable Income Summary 8,000.00 12,000.00 Sales Sales Returns & Allowances 280,000.00 18,000.00 Purchases 200,000.00 Purchases Returns & Allowances 3,000.00 Purchases Discounts 2,500.00 Freight-In 1,400.00