Unadjusted Balances Debit Credit Sales $1,750,000 Cost of Merchandise Sold $1,000,000 Estimated Returns Inventory Customer Refunds Payable 600 400 Estimated cost of merchandise that will be returned in the next year $8,000 Estimated percent of refunds for current year sales 0.6%
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Assume the following data for Casper Company before its year-end adjustments:
Journalize the
a. Estimated customer allowances
b. Estimated customer returns
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