On March 10, 2020, Wildhorse Company sold to Barr Hardware 230 tool sets at a price of $53 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Wildhorse allows Barr to return any unused tool sets within 60 days of purchase. Wildhorse 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 to its account. (a) Prepare journal entries for Wildhorse 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 Wildhorse prepares financial statements). Wildhorse believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (1) (To record sales) (To record cost of goods sold) (2) (To record sales returns) (To record cost of goods returned) (3) (Adjusting entry for sales returns) (Adjusting entry for cost of goods sold) (b) Indicate the income statement and balance sheet reporting by Wildhorse at March 31, 2020, of the information related to the Barr sales transaction. Income Statement (partial) $ : $ Balance Sheet (partial) $ : $ $

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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(a)

Prepare journal entries for Wildhorse 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 Wildhorse prepares financial statements). Wildhorse believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

(1)

(To record sales)

(To record cost of goods sold)

(2)

(To record sales returns)

(To record cost of goods returned)

(3)

(Adjusting entry for sales returns)

(Adjusting entry for cost of goods sold)

(b)

Indicate the income statement and balance sheet reporting by Wildhorse at March 31, 2020, of the information related to the Barr sales transaction.

Income Statement (partial)


		$

:

Balance Sheet (partial)


		$

:				$
				$

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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