Adjustment Merchandi Inventory Using I Accounts: Perlodic with Sales Returns and Allowances Sam Edwards owns a business called Sam's Stuff. A physical count ending inventory as of December 31, 20-- was $72,000. Based on Sam estimates that $5,000 of sales from this year will be returned cost of the merchandise expected to be returned is $3,000. Using t nt un T digo In uor

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Adjustment for Merchandise Inventory Using T Accounts: Periodic Inventory System
with Sales Returns and Allowances
Sam Edwards owns a business called Sam's Stuff. A physical count determined his
ending inventory as of December 31, 20-- was $72,000. Based on past experience,
Sam estimates that $5,000 of sales from this year will be returned next year. The
cost of the merchandise expected to be returned is $3,000. Using the partial Trial
Balance provided below, set up T accounts for Merchandise Inventory, Estimated
Returns Inventory, Customer Refunds Payable, Sales Returns and Allowances, and
Income Summary and prepare the year-end adjustments for Merchandise Inventory
and related accounts.
TRIAL BALANCE
(PARTIAL)
DEBIT
CREDIT
Merchandise Inventory
60,000.00
Estimated Returns Inventory
2,500.00
Customer Refunds Payable
4,000.00
Sales Returns and Allowances
20,000.00
Income Summary
For grading purposes use the labels shown and enter transactions in alphabetical
order.
TB Trial balance (beginning balance)
ATB Adjusted trial balance (ending balance)
(a) Remove the beginning balance in merchandise inventory.
(b) Add the new balance per the physical count.
(c) Adjust the customer refunds balance to the new estimate of next year returns
(use one adjusting entry).
(d) Remove the beginning balance in estimated returns inventory.
(e) Add the new balance per the estimate of merchandise expected to be returned.
Transcribed Image Text:Adjustment for Merchandise Inventory Using T Accounts: Periodic Inventory System with Sales Returns and Allowances Sam Edwards owns a business called Sam's Stuff. A physical count determined his ending inventory as of December 31, 20-- was $72,000. Based on past experience, Sam estimates that $5,000 of sales from this year will be returned next year. The cost of the merchandise expected to be returned is $3,000. Using the partial Trial Balance provided below, set up T accounts for Merchandise Inventory, Estimated Returns Inventory, Customer Refunds Payable, Sales Returns and Allowances, and Income Summary and prepare the year-end adjustments for Merchandise Inventory and related accounts. TRIAL BALANCE (PARTIAL) DEBIT CREDIT Merchandise Inventory 60,000.00 Estimated Returns Inventory 2,500.00 Customer Refunds Payable 4,000.00 Sales Returns and Allowances 20,000.00 Income Summary For grading purposes use the labels shown and enter transactions in alphabetical order. TB Trial balance (beginning balance) ATB Adjusted trial balance (ending balance) (a) Remove the beginning balance in merchandise inventory. (b) Add the new balance per the physical count. (c) Adjust the customer refunds balance to the new estimate of next year returns (use one adjusting entry). (d) Remove the beginning balance in estimated returns inventory. (e) Add the new balance per the estimate of merchandise expected to be returned.
Assets
Merchandise Inventory
TB
60,000 a) -
60,000
ATB
73,500
Estimated Returns Inventory
Liabilities
Customer Refunds Payable
Owner's Equity
Income Summary
Sales Returns and Allowances
Transcribed Image Text:Assets Merchandise Inventory TB 60,000 a) - 60,000 ATB 73,500 Estimated Returns Inventory Liabilities Customer Refunds Payable Owner's Equity Income Summary Sales Returns and Allowances
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