Brief Exercise 76 Sales returns LO74 During 2018 Its first y

Brief Exercise 7-6 Sales returns [LO7-4] During 2018, Its first year of operations, Hollis Industries recorded sales of $10,000,000 and experienced returns of $730,000. Cost of goods sold totaled $6,500,000 (65% of sales). The company estimates that 9% of all sales will be returned. all accounts receivable are outstanding. (If no entry is required for a transaction/event, select \"No Journal entry required\" In the first account field.) Journal entry worksheet Record the anticipated sales returns. Event General Jou

Solution

(1)

Event

General Journal

Debit

Credit

1

Sales Return

170000

Refund Liability

170000

Estimated Returns = 10000000 * 9% = 900000

Less :-Actual Returns = 730000

Remaining Estimated Returns = 170000

(2)

Event

General Journal

Debit

Credit

1

Inventory Estimated Returns

110500

Cost of Goods Sold

110500

COGS = 170000 * 65% = 110500

Event	General Journal	Debit	Credit
1	Sales Return	170000
	Refund Liability		170000