lalifax Manufacturing allows its customers to return merchandise for any reason

Question

lalifax 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 2016 with an allowance for sale returns of $300,000. During 2016, Halifax sold merchandise on account for $11,500,000. This merchandise cost Halifax $7,475,000 (659s of selling prices). Also during the year, customers returned $450,000 in sales for credit. Sales returns are estimated to be 4% of sales. Required 1. Assume they didn't record the returns as a year end adjusting entry and record expected returns at the time of sale. 2. Prepare the entry to record the merchandise returns and the year-end adjusting entry for estimated returns. 3. What is the amount of the year end allowance for sales returns after the adjusting entry is recorded? 1. Assume they didn't record the returns as a year-end adjusting entry and 2. Prepare the entry to record the merchandise returns and the year o record expected returns at the time of sale adjusting entry for estimated returns. Total expected returns Sale: : Estimate Returns Year End Adjusting Entry Returns PracticeRevenue Recognition Practice Recognition Practice 2

Explanation / Answer

Sales during the year 2016         115,00,000 Etimated Sales Returns 4% Etimated Sales Returns             4,60,000 Actual Returns             4,50,000 Difference                 10,000 1 Estimated Sales Returns             4,60,000    Customers Account             4,60,000 (Estimated Sales Returns during the year) 2 Customers Account                 10,000    Estimated Sales Returns                 10,000 (Estimated Sales Returns during the year) Sales Returns beginning balance             3,00,000 Add : Estimated Returns             4,60,000 Less : Actual Returns             4,50,000 Closing Balance             3,10,000 Actual Returns             4,50,000 Cost of Sales 65% Actual Cost of Returns             2,92,500

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.