In August, Joplin Designs sold $510,000 of merchandise; all sales were in cash.The cost of sales for August was $400,000. Based on past experience, Joplin uses an estimatedreturn rate of 3% of sales. Record the journal entries for the monthly sales, cost of sales,estimated returns, and cost of estimated returns for August.

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter7: Budgeting
Section: Chapter Questions
Problem 14EA: Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is...
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In August, Joplin Designs sold $510,000 of merchandise; all sales were in cash.
The cost of sales for August was $400,000. Based on past experience, Joplin uses an estimated
return rate of 3% of sales. Record the journal entries for the monthly sales, cost of sales,
estimated returns, and cost of estimated returns for August.

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Assume that in September, Joplin Designs customers actually return
$150,000 of inventory. Using the same cost of goods sold percentage, the company
would make the following entries to record 1) the refunds and 2) cost of items returned.

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