Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. Halifax only makes credit sales. The company began 2013 with an allowance for sales returns of $300,000. During 2013, Halifax sold merchandise on account for $11,500,000. This merchandise cost Halifax $7,475,000 (65% of selling prices). Also during the year, customers returned $450,000 in sales for credit. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.
Required:
1.Prepare the entry to record the merchandise returns. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
2.Prepare the entry to record the year-end adjusting entry for estimated returns. Note: Record the estimated returns at net amounts. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?