Question

On March 10, 2017, Sandhill Company sold to Barr Hardware 160 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Sandhill allows Barr to return any unused tool sets within 60 days of purchase. Sandhill estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2017, Barr returned 7 tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Sandhill sold them for cash.

Prepare journal entries for Sandhill to record (1) the sale on March 10, 2017, (2) the return on March 25, 2017, and (3) any adjusting entries required on March 31, 2017 (when Sandhill prepares financial statements). Sandhill believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles	Debit	Credit
(1)	?????	8000
	Sales Revenue		8000
	(to record sales)
	Cost of Goods Sold	4800
	Inventory		4800
	(to record costs of goods sold)
(2)	Sales returns and Allowances	350
	???		350
	(to record sales returns)
	Returned Inventory	210
	Cost of Goods Sold		210
	(to record cost of goods returned)
(3)	Sales returns and allowances	150
	????		150
	(adjusting entry for sales returns)
	Estimated Inventory Returns	90
	Cost of Goods Sold		90
	(adjusting entry for cost of goods sold)

Indicate the income statement and balance sheet reporting by Sandhill at March 31, 2017, of the information related to the Barr sales transaction.

Income	Statement
Date	??
Sales Revenue	8000
Less: Sales Returns and Allowances	500
Net Sales	7500
Cost of Goods Sold	???
Gross Profit	???

Balance	Sheet
March 31,	2017
????	???
????	???
????	???

List of accounts

Accounts Receivable Accounts Payable Advertising Expense Allowance for Sales Returns and Allowances Billings on Construction in Process Cash Cash, Parts, Labor Commission Expense Commission Revenue Construction in Process Construction Expenses Contract Asset Contract Liability Cost of Goods Sold Cost of Installment Sales Deferred Gross Profit Delivery Expense Discount on Notes Receivable Estimated Inventory Returns Finished Goods Inventory Franchise Revenue Freight- Out Gain on Repossession Income Summary Installment Accounts Receivable Installment Sales Revenue Interest Expense Interest Revenue Inventory Inventory on Consignment Liability to Bonus Point Customers Liability to Enyart Company Liability to Werner Metal Company License Revenue Loss from Long-Term Contracts Loss on Repossession Materials, Cash, Payables No Entry Notes Receivable Operating Expenses Payable to Consignor Purchases Realized Gross Profit Repossessed Merchandise Retained Earnings Returned Inventory Revenue from Consignment Sales Revenue from Franchise Fees Revenue from Long-Term Contracts Sales Discounts Sales Discounts Forfeited Sales Returns and Allowances Sales Revenue Service Revenue Unearned Franchise Revenue Unearned Sales Revenue Unearned Service Revenue Unearned Warranty Revenue Warranty Expense Warranty Liability

Answer 1