Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 5, Problem 20E
Exercise 5-20
Recording estimates of future returns
P6
Chico Company allows its customers to return merchandise within 30 days of purchase. At December 31, 2017, the end of its first year of operations, Chico estimates future-period merchandise returns of $60,000 (cost of $22,500) related to its 2017 sales.
. On January 3, 2018, a customer returns merchandise with a selling price of $2,000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective.
a. Prepare the December 31, 2017, year-end
b. Prepare the December 31, 2017, year-end adjusting journal entry for estimated future inventory returns and allowances (cost side).
c. Prepare the January 3, 2018, journal entry(ies) to record the merchandise returned.
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Exercise 7-8 (Algo) Sales
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 2024 with a refund
liability of $390,000. During 2024, Halifax sold merchandise on account for $13,300,000. Halifax's merchandise costs are 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 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 3% of sales, are
recorded as an adjusting entry at the end of the year.
Required:
1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024
of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year…
QUESTION ONE
At beginning of July 2021, Idah & Faith (IF) Co had 25 microwave ovens in inventory costing of
K750 per unit. Over the next three months, the company made the following purchases.
Date
Quantity
Unit cost
K
6 July
770
5 August
4
800
1 September
8.
850
14 September
6.
880
During that period, there were sales of 35 units, generating a total sales revenue of K38,500.
REQUIRED:
a) Prepare the stores ledger card for the materials in stock that record all material movements
using:
(i) FIFO method
(ii) LIFO method
b) Based on the work done in (a) above, determine the cost of sales and profit for three months to
30 September using FIFO and also based on LIFO.
c) Compare the reported profit of the company in (b) above over the three months to 30 September
based on the two methods (FIFO and LIFO) and comment on the results.
Question 11-7
The following are the unadjusted balances of Matheson Merchandising for the year ended December 31, 2019. Only half of Matheson's sales are on account as are the sales returns and allowances.
Accounts receivable $110,500
Allowance for doubtful accounts,
Dec. 31, 2019, prior to adjustment 520 Cr.
Sales Revenue for 2019 400,400
Sales Returns and Allowances for 2019 10,400
Assuming that Matheson estimates bad debts at 2 % of outstanding accounts receivable, what is the amount of the bad-debt expense for the year.
Chapter 5 Solutions
Fundamental Accounting Principles
Ch. 5 - Prob. 1DQCh. 5 - 2. In comparing the accounts of a merchandising...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - Prob. 10DQ
Ch. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - Prob. 13DQCh. 5 - Prob. 14DQCh. 5 - Prob. 15DQCh. 5 - Prob. 1QSCh. 5 - Prob. 2QSCh. 5 - Prob. 3QSCh. 5 - Prob. 4QSCh. 5 - Prob. 5QSCh. 5 - Prob. 6QSCh. 5 - Prob. 7QSCh. 5 - Prob. 8QSCh. 5 - Prob. 9QSCh. 5 - Prob. 10QSCh. 5 - Prob. 11QSCh. 5 - Prob. 12QSCh. 5 - Prob. 13QSCh. 5 - Prob. 14QSCh. 5 - Prob. 15QSCh. 5 - Prob. 16QSCh. 5 - Prob. 17QSCh. 5 - Prob. 18QSCh. 5 - Prob. 19QSCh. 5 - Prob. 20QSCh. 5 - Prob. 21QSCh. 5 - Prob. 22QSCh. 5 - Prob. 23QSCh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - Exercise 5-20 Recording estimates of future...Ch. 5 - Prob. 21ECh. 5 - Prob. 22ECh. 5 - Prob. 23ECh. 5 - Prob. 1APSACh. 5 - Prob. 2APSACh. 5 - Prob. 3APSACh. 5 - Prob. 4APSACh. 5 - Prob. 5APSACh. 5 - Prob. 6APSACh. 5 - Prob. 1BPSBCh. 5 - Problem 5-2B
Preparing journal entries for...Ch. 5 -
Problem 5-3B
Computing merchandising amounts...Ch. 5 - Prob. 4BPSBCh. 5 - Prob. 5BPSBCh. 5 - Prob. 6BPSBCh. 5 - Prob. 5SPCh. 5 - Prob. 1GLPCh. 5 - Prob. 2GLPCh. 5 - Prob. 3GLPCh. 5 - Prob. 1BTNCh. 5 - Prob. 2BTNCh. 5 - Prob. 3BTNCh. 5 - Prob. 4BTNCh. 5 - Prob. 5BTNCh. 5 - Prob. 6BTNCh. 5 - Prob. 7BTNCh. 5 - Prob. 8BTNCh. 5 - Prob. 9BTN
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