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Please help! I am stumped! Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a
Please help! I am stumped!
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $410,000. During 2024, Halifax sold merchandise on account for $13,500,000. Halifax's merchandise costs are 65% of merchandise selling price. Also during the year, customers returned $532,000 in sales for credit, with $294,000 of those being returns of merchandise sold prior to 2024 , and the rest being merchandise sold during 2024 . Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024 ; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Complete this question by entering your answers in the tabs below. What is the amount of the year-end refund liability after the adjusting entry is recordedStep by Step Solution
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