Question

During 2021, its first year of operations, Hollis Industries recorded sales of $11,300,000 and experienced returns of $790,000. Cost of goods sold totaled $7,910,000 (70% of sales). The company estimates that 8% of all sales will be returned. Prepare the year-end adjusting journal entries to account for anticipated sales returns, assuming that all sales are made on credit and all accounts receivable are outstanding. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 > Record the anticipated sales returns. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

No	Account	Debit	Credit
1	Sales returns	114,000
	Refund liability (11,300,000*8% - 790,000)		114,000
	(to record anticipated returns)
2	Inventory - Returns	79,800
	Cost of Goods Sold (114,000*70%)		79,800
	(to record return of inventory)