Question

Sheridan Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Sheridan estimates returns of 20%. Sheridan sells these planters on account for $1,610,000 (cost $885,500) on January 2, 2020. Customers are required to pay the full amount due by March 15, 2020.

Prepare the journal entry for Sheridan at January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2020
	(To recognize revenue.)
	(To record cost of goods sold.)

List of Accounts

  

  

Assume that one customer returns planters on March 1, 2020, due to unsatisfactory performance. Prepare the journal entry to record this transaction, assuming this customer purchased $97,000 of planters from  Sheridan and also record the entry required to pay the full amount due by March 15, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2020Mar. 1, 2020Mar. 15, 2020Mar. 31, 2020
	(To record sales returns)
	(To record cost of goods returned)
Jan. 2, 2020Mar. 1, 2020Mar. 15, 2020Mar. 31, 2020

List of Accounts

  

  

Assume Sheridan prepares financial statements quarterly. Prepare the necessary entries (if any) to adjust Sheridan’s financial results for the above transactions on March 31, 2020, assuming remaining expected returns of $225,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 31, 2020
	(To record sales returns)
	(To record cost of goods returned)

Answer 1