Q5SE
Question
On December 31, Jack Photography Supplies estimated that approximately 2% of merchandise sold will be returned. Sales Revenue for the year was \(80,000 with a cost of \)48,000. Journalize the adjusting entries needed to account for the estimated returns.
Step-by-Step Solution
VerifiedAnswer
The total of debits and credits is $2,560.
In accounting, the term sales returns denote the goods returned by the customers to the business entity due to damages or defects. Sales returns are reported differently under periodic and perpetual inventory systems.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
Dec 31 | Sales revenue (80,000*2%) | 1,600 |
|
| Refunds payable |
| 1,600 |
| (To record the estimated returns) |
|
|
Dec 31 | Estimated returns inventory |
|
|
| Cost of goods sold (48,000*2%) | 960 |
|
| (To record the cost of goods sold) |
| 960 |