Halifax Manufacturing allows its customers to return merchandise for some reason up to 90 days after delivery and receive a credit to their accounts. The company started 2013 with an allowance for sales returns of $300,000. In 2013, Halifax sold merchandise on account for $11,500,000. This merchandise cost Halifax $7,475,000 (65 percent of selling prices). Also through the year, customers returned $450,000 in sales for credit. Sales returns, estimated to be 4 percent of sales, are recorded as an adjusting entry at the end of the year.
1.1 Create the entry to record the merchandise returns. (If no entry is needed for a particular transaction, select "No journal entry required" in first account field.)
Record the actual sales returns.
Record the return of merchandise to stock.
1.2 Create the entry to record the year-end adjusting entry for predictable returns. (If no entry is needed for a particular transaction, select "No journal entry required" in first account field.)
Record the year-end adjusting entry for expected returns.
Record the adjusting entry for the expected return of merchandise.
1.3 Evaluate the amount of the year-end allowance for sales returns after adjusting entry is recorded?
Ending balance in allowance account: