On March 10, 2022, Ayayai Company sold to Barr Hardware 200 tool sets at a price of $47 each (cost $30 per set) for cash. Ayayai allows Barr to return any unused tool sets within 60 days of purchase. Ayayai estimates that: (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2022, Barr returned 7 tool sets and received a credit to its account. (a) Your answer is partially correct. Prepare journal entries for Ayayai to record (1) the sale on March 10, 2022, (2) the return on March 25, 2022, and (3) any adjusting entries required on March 31, 2022 (when Ayayai prepares financial statements). Ayayai believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (1) Cash Sales Revenue (To record cash sales) Cost of Goods Sold Inventory (To record cost of goods sold) 9400 6000 9400 6000 (2) Sales Returns and Allowances 282 (3) Refund Liability (To record sales returns) Returned Inventory Cost of Goods Sold (To record cost of goods returned) Sales Returns and Allowances Refund Liability (Adjusting entry for sales returns) Estimated Inventory Returns Cost of Goods Sold (Adjusting entry for cost of goods sold) 180 188 120 282 180 188 120 On March 10, 2022, Ayayai Company sold to Barr Hardware 200 tool sets at a price of $47 each (cost $30 per set) for cash. Ayayai allows Barr to return any unused tool sets within 60 days of purchase. Ayayai estimates that: (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2022, Barr returned 7 tool sets and received a credit to its account. (a) Your answer is partially correct. Prepare journal entries for Ayayai to record (1) the sale on March 10, 2022, (2) the return on March 25, 2022, and (3) any adjusting entries required on March 31, 2022 (when Ayayai prepares financial statements). Ayayai believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (1) Cash Sales Revenue (To record cash sales) Cost of Goods Sold Inventory (To record cost of goods sold) 9400 6000 9400 6000 (2) Sales Returns and Allowances 282 (3) Refund Liability (To record sales returns) Returned Inventory Cost of Goods Sold (To record cost of goods returned) Sales Returns and Allowances Refund Liability (Adjusting entry for sales returns) Estimated Inventory Returns Cost of Goods Sold (Adjusting entry for cost of goods sold) 180 188 120 282 180 188 120