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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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