Assume the following data for Casper Company before its year-end adjustments:
Unadjusted Balances Debit Credit Sales $1,750,000 Cost of Merchandise Sold $1,000,000 Estimated Returns Inventory 600 Customer Refunds Payable400
Estimated cost of merchandise that will be returned in the next year $8,000
Estimated percent of refunds for current year sales 0.6%
Journalize the adjusting entries for the following:
a. Estimated customer allowances
b. Estimated customer returns
Answer:
a.
Sales ($1,750,000 × 0.006) 10,500
Customer Refunds Payable 10,500
b.
Estimated Returns Inventory 8,000
Cost of Merchandise Sold 8,000