Business, 16.04.2020 01:42 alyssatamayo641

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $370,000. During 2021, Halifax sold merchandise on account for $12,200,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $481,000 in sales for credit, with $266,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required:
1. Prepare the entry to record the merchandise returns and the year-end adjusting entry for estimated returns. Note: Record the estimated returns at net amounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?

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