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

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