Adjusting entry for customer refunds, allowances, and returns Statz Company had

Question

Adjusting entry for customer refunds, allowances, and returns Statz Company had sales of $1,800,000 and related cost of goods soid of $1,150,000 for its first year of operations ending December 31. Stacz provides customers a refu $16,000 will be returned. Assume that on February 3 of the following year, Buck Co. returned merchandise with a selling price of $5,000 for a cash vetund The eued ed merchandise. At the end of the year, Statz estimates that customers will reovest refunds tr 15% of sales and etrat that meowdse merchandise originally cost Statz $3,100. a. Journalize the adjusting entries on December 31 to record the expected customer returns Dec. 31 b. Journalize the entries to record the returned merchandise and cash refund to Buck Co. on February 3 Feb. 3

Explanation / Answer

a 31-Dec Sales returns and allowances 27000         Customer refund payable 27000 Estimated Returns inventory 16000          Cost of goods sold 16000 b 3-Feb Customer refund payable 5000          Cash 5000 Inventory 3100          Estimated Returns inventory 3100

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