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Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $360,000. During 2024, Halifax sold merchandise on account for $12,100,000. Halifax's merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $594,000 in sales for credit, with $328,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded?

Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $360,000. During 2024, Halifax sold merchandise on account for $12,100,000. Halifax's merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $594,000 in sales for credit, with $328,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1 Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $360,000. During 2024, Halifax sold merchandise on account for $12,100,000. Halifax's merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $594,000 in sales for credit, with $328,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. NO 3 Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Answer is complete but not entirely correct. 2 4 5 6 Complete this question by entering your answers in the tabs below. Required 1 Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in rear 2024 2024 2024 2024 Required 2 2024 2024 Refund liability Accounts receivable Required 1 Inventory Inventory estimated returns Sales returns Accounts receivable Inventory Cost of goods sold Sales returns Refund liability Generar Journal Inventory-estimated returns Cost of goods sold Required 2 ✓ ✔ ✓ ✓ ✔ Ⓒ ✔ Ⓒ < Required 1 30 33 DODIE 328,000 229,600 266,000✔✔ 186,200 307,000 x 214,900 Grean 328,000✔ 229,600 266,000 186,200 Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 20 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriat 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? 307,000x 214,900 x Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability $ 307,000 X Required 2 >
Transcribed Image Text:1 Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $360,000. During 2024, Halifax sold merchandise on account for $12,100,000. Halifax's merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $594,000 in sales for credit, with $328,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. NO 3 Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Answer is complete but not entirely correct. 2 4 5 6 Complete this question by entering your answers in the tabs below. Required 1 Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in rear 2024 2024 2024 2024 Required 2 2024 2024 Refund liability Accounts receivable Required 1 Inventory Inventory estimated returns Sales returns Accounts receivable Inventory Cost of goods sold Sales returns Refund liability Generar Journal Inventory-estimated returns Cost of goods sold Required 2 ✓ ✔ ✓ ✓ ✔ Ⓒ ✔ Ⓒ < Required 1 30 33 DODIE 328,000 229,600 266,000✔✔ 186,200 307,000 x 214,900 Grean 328,000✔ 229,600 266,000 186,200 Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 20 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriat 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? 307,000x 214,900 x Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability $ 307,000 X Required 2 >
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