For the year ended December 31, 2017, Modern Furniture made total sales of $1,00
ID: 2411521 • Letter: F
Question
For the year ended December 31, 2017, Modern Furniture made total sales of $1,000,000 but expects to receive requests for refunds of returned or damaged merchandise that are 2% of total sales. The company also expects to receive returns of merchandise costing $12,000. Prepare the adjusting entries required at year-end if 2017 is the company’s first year of operations. (5.5 pts)
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Assume that the following year Modern Furniture (from problem #3) paid a refund of $4,500 for inventory costing $2,500. Prepare the journal entry to record this payment and reduction in inventory, which occurred on January 22, 2018. (5 pts)
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Explanation / Answer
Journal Entries Worksheet Date General Journal Debit Credit December 31,2017 Sales Return and allowances $32,000.00 To Account Receivable $32,000.00 (To Record the provission for sales return and allowance at year end) Sales Return $4,500.00 January 22, 2018 To Sales return and allowances $4,500.00 (To record the actual sales return) Inventory $2,500.00 January 22, 2018 To Cost of Goods Sold $2,500.00 (to record the return of inventory) Sales Return & Allowances: 2% of total Sales = $ 1000,000 X 2% = $20,000 Addittional retrun expected $12,000 Total $32,000