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 2018 with an allowance for sales returns of $420,000. During 2018, Halifax sold merchandise on account for $12,700,000. This merchandise cost Halifax $7,620,000 (60% of selling prices). Also during the year, customers returned $619,000 in sales for credit. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year.
Required:
1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance.
2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
REQUIRED 1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
REQUIRED 2:What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
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 2018 with an allowance for sales returns of $420,000. During 2018, Halifax sold merchandise on account for $12,700,000. This merchandise cost Halifax $7,620,000 (60% of selling prices). Also during the year, customers returned $619,000 in sales for credit. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year.
Required:
1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance.
2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
REQUIRED 1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
REQUIRED 2:What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Related questions
For the year ended December 31, 2017, Modern Furniture made total sales of $1,000,000 but expects to receive requests for refunds of returned or damaged merchandise that are 2% of total sales. The company also expects to receive returns of merchandise costing $12,000. Prepare the adjusting entries required at year-end if 2017 is the companyâs first year of operations. (5.5 pts)
| Date | Account Titles | Debits | Credits |
Assume that the following year Modern Furniture (from problem #3) paid a refund of $4,500 for inventory costing $2,500. Prepare the journal entry to record this payment and reduction in inventory, which occurred on January 22, 2018. (5 pts)
Swathmore Clothing Corporation grants its customers 30 daysâcredit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 2% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly.
| At the end of 2012, accounts receivablewere $606,000 and the allowance account had a credit balance of$70,000. Accounts receivable activity for 2013 was as follows:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
