Chico Company allows its customers to return merchandise within 30 days of purchase. *At December 31, the end of its first year of operations, Chico estimates future-period merchandise returns of $60000 (cost of $22500) related to it's current year sales. *A few days later, on January 3, a customer returns merchandise with a selling price of $2000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective. a.Prepare the December 31 year -end adjusting journal entry for estimated future sales returns and allowances (revenue side). b.Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). c.Prepare the January 3 journal entries to record the merchandise returned.
Chico Company allows its customers to return merchandise within 30 days of purchase.
*At December 31, the end of its first year of operations, Chico estimates future-period merchandise returns of $60000 (cost of $22500) related to it's current year sales.
*A few days later, on January 3, a customer returns merchandise with a selling price of $2000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective.
a.Prepare the December 31 year -end
b.Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side).
c.Prepare the January 3 journal entries to record the merchandise returned.
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