Question

Scott Company had sales of $12,000,000 and related cost of goods sold of $7,100,000 for the year ending December 31, 20Y8. Scott provides customers a refund for any returned or damaged merchandise. Scott Company estimates that customers will request refunds for 0.6% of sales and estimates that merchandise costing $55,000 will be returned in 20Y9.

Journalize the adjusting entries on December 31, 20Y8, to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
Scott Company
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 220 Unearned Rent 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Rent Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense

Journalize the adjusting entries on December 31 to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
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Answer 1

*Any doubt please comment

Date	Description	Debit	Credit
20Y8 Dec 31	Sales [12000000*0.6%]	72000
	Customer refunds payable		72000
20Y8 Dec 31	Estimated Returns Inventory	55000
	Cost of Goods Sold		55000