EX 6-20 Adjusting entries for refunds, allowances, and returns

Assume the following data for Oshkosh Company before its year-end adjustments:

Unadjusted Balances 
Debit Credit
Sales $51,600000
Cost of Merchandise Sold $31,750,000
Estimated Returns Inventory 28,100
Customer Refunds Payable115,400
Estimated cost of merchandise that  
 will be returned in the next year $400,000
Estimated percent of refunds for  
 current year sales 1.2%









Journalize the adjusting entries for the following:

a. Estimated customer refunds and allowances 

b. Estimated customer returns



Answer:
a. Sales ($51,600,000 × 1.2%) 619,200
             Customer Refunds Payable 619,200
b. Estimated Returns Inventory 400,000

             Cost of Merchandise Sold 400,000