Merchandise Inventory and related accounts.

Label the amounts:

$($a$)$ Remove the beginning balance in merchandise inventory.

$($b$)$ Add the new balance per the physical count.

$($c$)$ Adjust the customer refunds balance to the new estimate of next year returns $($use one adjusting entry$).$

$($d$)$ Remove the beginning balance in estimated returns inventory.

$($e$)$ Add the new balance per the estimate of merchandise expected to be returned.

TAccounts Instructions