On March 10, 2020, Pharoah Company sold to Barr Hardware 180 tool sets at a price of $51 each (cost $29 per set)with terms of n/60, f.o.b. shipping point. Pharoah allows Barr to return any unused tool sets within 60 days of purchase.Pharoah estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3)the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned 6 tool sets and received a credit toits account.(a)Prepare journal entries for Pharoah to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and(3) any adjusting entries required on March 31, 2020 (when Pharoah prepares financial statements). Pharoahbelieves the original estimate of returns is correct. (Credit account titles are automatically indentedwhen the amount is entered. Do not indent manually. If no entry is required, select "No entry" forthe account titles and enter 0 for the amounts.)Your answer is correct.No. Account Titles and Explanation(1) Accounts Receivable(2)(3)Sales Revenue(To record sales)Cost of Goods SoldInventory(To record cost of goods sold)Sales Returns and AllowancesAccounts Receivable(To record sales returns)Returned InventoryCost of Goods Sold(To record cost of goods returned)Sales Returns and AllowancesAllowance for Sales Returns and Allowances(Adjusting entry for sales returns)Estimated Inventory ReturnsCost of Goods SoldDebit9180FONT OU5220306174204116Credit Indicate the income statement and balance sheet reporting by Pharoah at March 31, 2020, of the informationrelated to the Barr sales transaction.Sales RevenueLess : Sales Returns and AllowancesNet SalesCost of Goods SoldGross profitIncome Statement (partial)For the Quarter Ended March 31, 2020Less :<LAMarch 31, 2020LABalance Sheet (partial)LAtA

These are the accounting transactions that are having a monetary impact on the financial statement…

On March 10, 2020, Pharoah Company sold to Barr Hardware 180 tool with terms of n/60, f.o.b. shipping point. Pharoah allows Barr to return a Pharoah estimates that (1) 10 sets will be returned, (2) the cost of reco the returned tools sets can be resold at a profit. On March 25, 2020, Ba its account.

On March 10, 2020, Pharoah Company sold to Barr Hardware 180 tool with terms of n/60, f.o.b. shipping point. Pharoah allows Barr to return a Pharoah estimates that (1) 10 sets will be returned, (2) the cost of reco the returned tools sets can be resold at a profit. On March 25, 2020, Ba its account.

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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