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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Adjusting entries for refunds, allowances, and returns

Assume the following data for Oshkosh Company before its year-end adjustments:

  Unadjusted Balances
  Debit Credit
Sales   $51,600000
Cost of Merchandise Sold $31,750,000  
Estimated Returns Inventory 28,100  
Customer Refunds Payable   115,400
Estimated cost of merchandise that will be returned In the next year $400,000  
Estimated percent of refunds for current year sales 1.2%  

Journalize the adjusting entries for the following:

  1. a. Estimated customer refunds and allowances
  2. b. Estimated customer returns

a.

To determine

Sales is an activity of selling the merchandise inventory of a business.

To Record: The adjusting entry for estimated customer allowances.

Explanation

Explanation

  • Sales is revenue and it decreases the value of equity by $619,200. Therefore, debit sales with $619,200...

b.

To determine

To Record: The adjusting entry for estimated customer returns.

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