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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

MERCHANDISE INVENTORY ADJUSTMENTS: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Use the information provided below to prepare a partial end-of-period spreadsheet for Karen’s Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is $60,000. Karen estimates that customers will be granted $15,000 in refunds next year for merchandise sold this year. The estimated cost of the returned inventory is $10,000.

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  1. 1. Complete the Adjustments columns for Merchandise Inventory and related accounts.
  2. 2. Extend all accounts to the Adjusted Trial Balance columns.
  3. 3. Prepare the cost of goods sold section from the spreadsheet.

1.

To determine

Complete the adjustments columns for merchandise inventory and related accounts.

Explanation

Periodic inventory system:

The method or system of recording the transactions related to inventory occasionally or periodically are referred to as periodic inventory system.

Adjustments for merchandise inventory- Periodic inventory system:

The purchase account is debited and cash or accounts payable is credited, if merchandise inventory is purchased and, cash or accounts receivables account is debited and sales account is credited, if merchandise inventory is sold under periodic inventory system.

Adjustments for sales returns and allowances- Periodic inventory system:

The sales returns and allowances accounts are debited and accounts receivable account is credited if, customers return merchandise purchased this year or the previous year...

2.

To determine

Extend all accounts to the adjusted trail balance.

3.

To determine

Prepare the cost of goods sold section from the spreadsheet.

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