In: Accounting
Scott Company had sales of $12,350,000 and related cost of goods sold of $7,500,000. Scott provides customers a refund for any returned or damaged merchandise. At the end of the year, Scott estimates that customers will request refunds for 0.8% of sales and estimates that merchandise costing $48,000 will be returned.
Journalize the adjusting entries on December 31 to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account tit
CHART OF ACCOUNTSScott CompanyGeneral Ledger
ASSETS |
||
---|---|---|
110 |
Cash |
|
120 |
Accounts Receivable |
|
125 |
Notes Receivable |
|
130 |
Inventory |
|
131 |
Estimated Returns Inventory |
|
140 |
Office Supplies |
|
141 |
Store Supplies |
|
142 |
Prepaid Insurance |
|
180 |
Land |
|
192 |
Store Equipment |
|
193 |
Accumulated Depreciation-Store Equipment |
|
194 |
Office Equipment |
|
195 |
Accumulated Depreciation-Office Equipment |
|
LIABILITIES |
||
210 |
Accounts Payable |
|
216 |
Salaries Payable |
|
218 |
Sales Tax Payable |
|
219 |
Customer Refunds Payable |
|
220 |
Unearned Rent |
|
221 |
Notes Payable |
EQUITY |
||
---|---|---|
310 |
Common Stock |
|
311 |
Retained Earnings |
|
312 |
Dividends |
|
313 |
Income Summary |
|
REVENUE |
||
410 |
Sales |
|
610 |
Rent Revenue |
EXPENSES |
|
---|---|
510 |
Cost of Goods Sold |
521 |
Delivery Expense |
522 |
Advertising Expense |
524 |
Depreciation Expense-Store Equipment |
525 |
Depreciation Expense-Office Equipment |
526 |
Salaries Expense |
531 |
Rent Expense |
533 |
Insurance Expense |
534 |
Store Supplies Expense |
535 |
Office Supplies Expense |
536 |
Credit Card Expense |
539 |
Miscellaneous Expense |
710 |
Interest Expense |
Journalize the adjusting entries on December 31 to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
DATE |
DESCRIPTION |
POST. REF. |
DEBIT |
CREDIT |
ASSETS |
LIABILITIES |
EQUITY |
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Answer:
Date |
Description |
Debit $ |
Credit $ |
31-Dec |
Sales returns and allowance |
98800 |
|
Customer refund payable |
98800 |
||
(12,350,000*0.8%) |
|||
(To record the estimated sales refund from the customer) |
|||
31-Dec |
Estimated Returns Inventory |
48000 |
|
Cost of goods sold |
48000 |
||
(To record the cost for estimated sales return) |