Question

The records of Garden Company indicate sales of $900,000, cost of goods sold of $500,000, an...

The records of Garden Company indicate sales of $900,000, cost of goods sold of $500,000, an ending inventory balance of $100,000, and estimated returns of 1% of sales. The adjusting journal entries to record estimated returns will include a

a. credit to Sales for $9,000.

b. credit to Customer Refunds Payable for $5,000.

c. debit to Inventory for $5,000.

d. debit to Sales for $9,000.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sales = $900,000

Cost of goods sold = $500,000

Estimated sales returns = 1% of sales

= 900,000 x 1%

= $9,000

Cost of inventory returned = Cost of goods sold x 1%

= $5,000

To record estimated sales returns, Following journal entries are needed:

General Journal Debit Credit
Sales returns $9,000
Customer refunds payable $9,000
Inventory $5,000
Cost of good sold $5,000

Hence, correct option is c.

Kindly comment if you need further assistance.

Thanks‼!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Adjusting entry for customer refunds, allowances, and returns Statz Company had sales of $1,800,000 and related...
Adjusting entry for customer refunds, allowances, and returns Statz Company had sales of $1,800,000 and related cost of goods sold of $1,150,000 for its first year of operations ending December 31. Statz provides customers a refund for any returned or damaged merchandise. At the end of the year, Statz estimates that customers will request refunds for 1.5% of sales and estimates that merchandise costing $16,000 will be returned. Assume that on February 3 of the following year, Buck Co. returned...
Customer allowances and returns Assume the following data for Casper Company before its year-end adjustments: Unadjusted...
Customer allowances and returns Assume the following data for Casper Company before its year-end adjustments: Unadjusted Balances Debit Credit Sales $1,750,000 Cost of Merchandise Sold $1,000,000 Estimated Returns Inventory 600 Customer Refunds Payable 400 Estimated cost of merchandise that will be returned in the next year $8,000 Estimated percent of refunds for current year sales 0.6% a. Journalize the adjusting entry for the estimated customer allowances. fill in the blank b3996af29f97f94_2 fill in the blank b3996af29f97f94_4 b. Journalize the adjusting...
S&C Inc. has the following LIFO perpetual inventory​ records: Date Purchases Cost of Goods Sold Inventory...
S&C Inc. has the following LIFO perpetual inventory​ records: Date Purchases Cost of Goods Sold Inventory on Hand December 1 ​$3,000 December 7 ​$900 ​$3,900 December 18 ​$900 ​$3,000 December 31 ​$200 ​$3,200 The current replacement cost of the ending inventory is​ $2,400. To apply the lowerminus−ofminus−costminus−orminus−market ​rule, the journal entry would​ be: A. debit Cost of Goods Sold​ $800, credit Inventory​ $800 B. debit Inventory​ $900, credit Cost of Goods Sold​ $900 C. debit Inventory​ $800, credit Cost of...
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after...
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 2021 with a refund liability of $400,000. During 2021, Halifax sold merchandise on account for $12,500,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $613,000 in sales for credit, with...
Sales Transactions Journalize the following merchandise transactions: a. Sold merchandise on account, $20,700 with terms 1/10,...
Sales Transactions Journalize the following merchandise transactions: a. Sold merchandise on account, $20,700 with terms 1/10, n/30. The cost of the goods sold was $12,420. Sale Accounts Receivable Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Discounts Sales Returns and Allowances Sales Sales Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Purchases Discounts Purchases Returns and Allowances Purchases Sales Sales Discounts Sales Returns and Allowances Cost...
Star World Inc. generated $500,000 in credit sales. The company uses the percentage of sales method...
Star World Inc. generated $500,000 in credit sales. The company uses the percentage of sales method to estimate uncollectible accounts. The ending accounts receivable balance is $150,000. It was determined that 9% of credit sales will be uncollectible. Allowance for doubtful accounts holds a current balance of $10,000. The entry to record the above expense will include: Select one: a. a debit to Allowance for Doubtful Accounts for $45,000 b. a debit to Bad Debt Expense for $10,000 c. a...
Sales-Related Transactions Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $57,900, terms...
Sales-Related Transactions Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $57,900, terms n/30. The The cost that is reported as an expense when goods is sold.cost of the goods sold is $34,700. Showcase issues a A form used by a seller to inform the buyer of the amount the seller proposes to credit to the account receivable due from the buyer.credit memo for $11,600 for merchandise returned prior to Balboa paying the original invoice. The cost...
Exercise 5-07 a-b Sheffield Company had the following account balances at year-end: Cost of Goods Sold...
Exercise 5-07 a-b Sheffield Company had the following account balances at year-end: Cost of Goods Sold $61,330; Inventory $16,750; Operating Expenses $30,320; Sales Revenue $123,150; Sales Discounts $1,280; and Sales Returns and Allowances $2,070. A physical count of inventory determines that merchandise inventory on hand is $12,640. Prepare the adjusting entry necessary as a result of the physical count. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Prepare...
if you are using the perpetual inventory system and you sell, on account, goods for 100,000...
if you are using the perpetual inventory system and you sell, on account, goods for 100,000 which cost you $70,000, the journal entries for this transaction would not include a. a credit to sales for 100,000 b a credit to gain on sale for $30,000 c. a debit to A/R for $100,000 d. a debit to cost of goods sold for $70,000
If a return is made by the costumer, the following items are journalized: Debit to Sales...
If a return is made by the costumer, the following items are journalized: Debit to Sales Returns and Allowances and Credit Cash (or Accounts Receivable), Debit Inventory and Credit Cost of Goods Sold. What if the item isn't returned but the customer agrees on a lower price due to small negligible faulty on the goods? What should be the journal entries? It is only Debit to Sales Returns and Allowances and Credit Cash (or Accounts Receivable)?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT