December 31, Jill Photography Supplies estimated that approximately 2% of mercha

Question

December 31, Jill Photography Supplies estimated that approximately 2% of merchandise sold will be returned. Sales Revenue for the year was 95,000 with a cost of S60 000 Journalize the adjusting entries needed to account for estimated retums. (Assume the company uses a perpetual inventory system. Record debits first, then credits. Sclect the explanation on the last line of the jounal entry table.) (1) Begin by preparing the entry for the estimated refunds. Do not prepare the entry to record the estimated return of merchandise with this entry. We will do that in the following step Date Accounts and Explanation Debit Credit Dec. 31 (2) Prepare the entry for the estimated return of merchandise. Date Accounts and Explanation Debit Credit Dec. 31

Explanation / Answer

Dec-31 Sales return and allowance 1900 (95000*2%)              Accounts receivable 1900 Dec-31 Merchandise inventory 1200 (60000*2%)              Cost of goods sold 1200

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