Big 5 Sporting Goods, a sporting goods retailer headquartered in El Segundo, California with 434 stores in Arizona, California, Colorado, Idaho, Nevada, New Mexico, and Wyoming. Big 5 Sporting Goods allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Big 5 Sporting Goods's sales are for credit (no cash is collected at the time of sale). Big 5 Sporting Goods began the current year with a refund liability of $380,000. During the current year, Big 5 Sporting Goods sold merchandise on account for $12,300,000. Big 5 Sporting Goods' merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $603,000 in sales for credit, with $333,000 of those being returns of merchandise sold prior to the current year, and the rest being merchandise sold during the current year. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year

Big 5 Sporting Goods, a sporting goods retailer headquartered in El Segundo, California with 434 stores in Arizona, California, Colorado, Idaho, Nevada, New Mexico, and Wyoming. Big 5 Sporting Goods allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Big 5 Sporting Goods's sales are for credit (no cash is collected at the time of sale). Big 5 Sporting Goods began the current year with a refund liability of $380,000. During the current year, Big 5 Sporting Goods sold merchandise on account for $12,300,000. Big 5 Sporting Goods' merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $603,000 in sales for credit, with $333,000 of those being returns of merchandise sold prior to the current year, and the rest being merchandise sold during the current year. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Arrow Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Arrow's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $400,000. During 2021, Arrow sold merchandise on account for $12,000,000. Also during the year, customers returned $520,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. The amount to adjust the refund liability to its appropriate balance at year-end would be:A. 180,000B. 220,000C. 200,000D. 240,000
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Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with a refund liability of $390,000. During 2018, Halifax sold merchandise on account for $13,300,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $386,000 in sales for credit, with $213,000 of those being returns of merchandise sold prior to 2018, and the rest being merchandise sold during 2018. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Record the year-end adjusting entry for estimated returns. Please don't provide answer in image format thank you
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