Question

Check my work Beethoven Music Company started business in March 2018. Sales for its first year were $350,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that 10% of the merchandise sold to customers will be returned. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $27.500 in sales. Beethoven uses a perpetual inventory system eBook Required: 1. Prepare the journal entry to record the sale. 2. Prepare the journal entry to record sales returns 3. Prepare the journal entry to record the year-end adjusting entry for estimated sales returns. Assume that cash has not yet been collected for merchandise that could yet be returned Print sferences Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entry to record the year-end adjusting entry for estimated sales returns. Assume that cash has not yet been collected for merchandise that could yet be returned. (If no entry is required for a transaction/event, select "No journal entry require in the first account field.) View transaction list

Answer 1

Credit Debit $ 350,000 No. Account titles and Explanation 1) Accounts receivable Sales revenue (To record sales) $ 350,000 $ 192,500 Cost of goods sold (350,000*(100%-45%) Inventory (To record cost of goods sols) $ 192,500 $ 27,500 Sales return Accounts receivable (To record the sales return) $ 27,500 15,125 Inventory Cost of goods sold (27,500*(100%-45%) (To record the cost of goods returns) $ 15,125 3) Sa $ 7,500 Sales return [(350,000*10%)-27,500] Allowance for sales return (To record the estimated sales returns) $ 7,500 $ 4,125 Inventory estimated returns Cost of goods sold (7,500*(100%-45%) (To record the cost of estimated returns) $ 4,125