Assume the following data for Lusk Inc. before its year-end adjustments:
Unadjusted Balances Debit Credit Sales $3,600,000 Cost of Merchandise Sold $2,100,000 Estimated Returns Inventory 1,800 Customer Refunds Payable900
Estimated cost of merchandise that will be returned in the next year $15,000
Estimated percent of refunds for current year sales 0.8%
Journalize the adjusting entries for the following:
a. Estimated customer allowances
b. Estimated customer returns
Answer:
a.
Sales ($3,600,000 × 0.008)28,800
Customer Refunds Payable 28,800
b.
Estimated Returns Inventory 15,000
Cost of Merchandise Sold 15,000
