Question

In: Accounting

Zell Company had sales of $1,800,000 and related cost of merchandise sold of $1,150,000 for its first year of operations ending December 31, 2019.

Instructions Zell Company had sales of $1,800,000 and related cost of merchandise sold of 51,150,000 for its first year of op

Instructions 

Zell Company had sales of $1,800,000 and related cost of merchandise sold of $1,150,000 for its first year of operations ending December 31, 2019. Zell Company provides customers a refund for any returned or damaged merchandise. At the end of the year, Zel Company estimates that customers will request refunds and allowances for 1.5% of sales and estimates that merchandise costing $16,000 will be returned. Assume that on February 3, 2020, Anderson Co. returned merchandise with a selling price of $5,000 for a cash refund. The returned merchandise originally cost Zell Company $3,100 

Required: 

(a) Journalize the adjusting entries on December 31, 2019 to record the expected customer returns 

(b) Journalize the entries to record the returned merchandise and cash refund to Anderson Co 

   "Refer to the Chart of Accounts for exact wording of accounts

Solutions

Expert Solution

Journal Entry-Zell Company
S. No. Date Accoutn Tittle Debit Credit
a) 31-Dec-2019 Sales (1,800,000*1.5%) $27,000.00
Refunds Payable to Customer $27,000.00
Estimated Returns Inventory $16,000.00
Cost Of Merchandise Sold $16,000.00
b) 3-Feb-2020 Refunds Payable to Customer $5,000.00
Cash $5,000.00
Merchandise Inventory $3,100.00
Estimated Returns Inventory $3,100.00

ekkarill92 answered 2 years ago
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