Question

I only need help with requirment 1, question 5 & 6. I have less than an hour to submit the assignment. please help

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 $320,000. During 2021. Halifax sold merchandise on account for $11,700,000. Halifax's merchandise costs is 75% of merchandise selling price. Also during the year, customers returned $460,000 in sales for credit, with $255,000 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 entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the amount of the year-end refund liability after the adjusting entry is recorded? Ending balance in refund liability $ 253,000 Required 1

Answer 1

Refer the below images for the above asked questions in a detailed way of solution.

Solution Requirement : Esamiated returns -4-1-4 & 11700 000 Less - Actual Returns $ 468600 $(460000) 2000 Remaining estimated returns - merchandise • Recording That was of sold auto al retorns in 202h out prior to 2021 * Allowance for Sales returns/ Refond liability $255000 Ale Dr TO Accounts Receivable Alc $255000 * Inventory ale To Inventory Dr -estimated returns 1 191250 19250 Working [1 255000 475.).] merchandise that b) Recording was sold of actoal retorms in 2001 of during 2001. - $205000 * $2050 Sales retorns ale or To Accounts receivable Alc weiling: [ 460000 - 1255000 a $ 205000)

of 153750 Inventory To cost Al of Dr goods sold & 153750 working i (1 205000 + 75o = 153750] c) Adjusting the retend at year end. trability to its appropriate balance Sales $ 8000 retorns Alc or Go Refond liability Alc (calwlated above) $ 8000 & $6000 Inventory a estimated returns Atc or To cost of goods sold Alc. 16000 working : [ 8000x 75t0 = $ 6000] liability x 2: : What after is the the amount adjusting of the year-end refund entry is recorded s Deasurement 9 320000 particolars Amount Openning balance in refund liability Add Estimated retums of merchandise sold in 2001 & 468000 Less: Actual returns of merchandise sold prior to 9 (255000) Less: Actual returns of merchandise hold during $ (205000) 40 2021 closing balance in red and liability after $328000 adjustments