Pierce imports uses the perpetual

Chapter 4 Accounting for Merchandising Operations Company reports unadjusted first-year merchandise sales of $100,000 and cost of merchandise Exercise 4-21 sales of $30,000. a. Compute gross profit (using the unadjusted numbers above). b The company expects future returns and allowances equal to 5% of sales and 5% of cost of sales. Recording estimat future returns P6 1. Prepare the year-end adjusting entry to record the sales expected to be refunded. 2. Prepare the year-end adjusting entry to record the cost side of sales returns and allowances. 3. Recompute gross profit (using the adjusted numberns from parts l and 2). allowances. m parts I and 2)s c. Is Sales Refund Payable an asset, liability, or equity account? d. Is Inventory Returns Estimated an asset, liability, or equity account? Refer to Exercise 4-7 and prepare journal entries to record each of the merchandising transactions assum- Exercise 4 ing that the perpetual inventory system and the net method are used by both the buyer and the seller.Recording s shipping, an and seller- net method