On March 10, 2020, Stellar Company sold to Barr Hardware 230 tool sets at a price of $54 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Stellar allows Barr to return any unused tool sets within 60 days of purchase. Stellar 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. Assume that instead of selling the tool sets on credit, that Stellar sold them for cash. # Stellar's Financial Reporting for Barr Sales as of March 31, 2020## Income Statement (Partial)### For the Quarter Ended March 31, 2020- **Sales Revenue:** $12,420- **Less: Sales Returns and Allowances:** $540 - **Net Sales:** $11,880- **Cost of Goods Sold:** $6,160 - **Gross Profit:** $5,720## Balance Sheet (Partial)### As of March 31, 2020- **Accounts Receivable:** $12,096- **Allowance for Sales Returns and Allowances:** $216- **Inventory:** $280Instructions dictate listing assets in order of liquidity. The income statement provides a summary of revenues and expenses, while the partial balance sheet lists assets reflecting potential liquidity. **Journal Entry Transactions**This table showcases journal entry transactions commonly used in accounting. It is divided into three main entries, each demonstrating the accounting process for sales, returns, and adjustments.1. **Entry 1: Record Cash Sales** - **Cash** - Debit: 12,420 - **Sales Revenue** - Credit: 12,420 - *(To record cash sales)* Then to record the cost of goods sold: - **Cost of Goods Sold** - Debit: 6,440 - **Inventory** - Credit: 6,440 - *(To record cost of goods sold)*2. **Entry 2: Record Sales Returns** - **Sales Returns and Allowances** - Debit: 324 - **Accounts Payable** - Credit: 324 - *(To record sales returns)* Next, to record the cost of goods returned: - **Returned Inventory** - Debit: 168 - **Cost of Goods Sold** - Credit: 168 - *(To record cost of goods returned)*3. **Entry 3: Adjusting Entry for Sales Returns** - **Sales Returns and Allowances** - Debit: 216 - **Accounts Payable** - Credit: 216 - *(Adjusting entry for sales returns)* For inventory adjustments: - **Estimated Inventory Returns** - Debit: 112 - **Cost of Goods Sold** - Credit: 112 - *(Adjusting entry for cost of goods sold)***Diagram Explanation:**The table is organized to show the debit and credit transactions related to different financial activities. Each transaction includes an account title, the amount for debit and credit, and a brief explanation of the transaction’s purpose. This format aids in understanding the fundamental principles of double-entry bookkeeping.

Balance Sheet (Partial) At March 31, 2020 Assets Amount Accounts receivable 12,096 Less: allowance for sales return and allowance (324 ) Net sales 11,772 Returned inventory 336 Accounts receivable = 12,420-324 = 12,096 Returned inventory = 6*28+6*28 = 336