Question

In: Accounting

Scott Company had sales of $12,350,000 and related cost of goods sold of $7,500,000. Scott provides...

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

1

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

Solutions

Expert Solution

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)


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