Question

On March 10, 2020, Bonita Company sold to Barr Hardware 220 tool sets at a price of $53 each (cost $32 per set) with terms of n/60, f.o.b. shipping point. Bonita allows Barr to return any unused tool sets within 60 days of purchase. Bonita 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, 2020, Barr returned 5 tool sets and received a credit to its account. Prepare journal entries for Bonita to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (3) any adjusting entries required on March 31, 2020 (when Bonita prepares financial statements). Bonita 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 for the amounts.) Indicate the income statement and balance sheet reporting by Bonita at March 31, 2020, of the information related to the Barr sales transaction. Income Statement (partial) Balance Sheet (partial)

Answer 1

solution Preparation of Journal entries Date Accounts title { explanation Debit (6) Credit (86) March 1, Account's receivable (220X53) 1660 2020 sales revenue 11660 (To recond sales By Bonita company) Touo Cost Of goods sold (220x32) Inventory (To record cost of goods sold) touo march-25, 2020 sales returns and allowances 265 Account's receivable (5 tool X 53) To record sales returned) 265 Inventary returned to 160 cost of goods sold in 160 (5 took X32) (to record cost of goods sold)

marchal 2605 godo sales returns & allowances (5X$53) Allowance for sales returns & allowances [to recand adjusting entry for sales returns] 965 estimated Inventory returns 160 cost of goods sold (SX132) (To recond Adjusting entry for cost of goods sold] DA 160 57 7 working Note: on march 31, 2020, is for Bonita company estimated that 10 sets will be returned. But only s set's units returned till date. so on march 31 Adjusting entries for balance s unit's needs to be passed.

Income statement ( Partial) for the Quarter ended march 31, 2090 Amount ($) 11.660 (5300) Particolars sales revenue Less: sales retums and allowances (265+265) Net salle Less; cost of goods sold (7ouo - 160-1601 Gross Profit - 11.130 (6, 720) 4,410 Balance sheet (Partial) At march31, 2020 Asset's Amount ($) 1.395 (265) Accounts receivable (11.660-265) Less allowance for sales returns and alowany Net sales Returned Inventory (160+ 160) 1.130 320