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Bezzdna [24]
2 years ago
9

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credi

t to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.
Required:
a. Prepare the entry to record the merchandise returns and the year-end adjusting entry for estimated returns.
b. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Business
1 answer:
borishaifa [10]2 years ago
6 0

Answer:

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 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.

Explanation:

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 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.

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Answer:

$18.73 per stock

Explanation:

we need to calculate the company's terminal value and we can use the dividend growth model:

P₀ = Div₁ / (Re - g)

  • Div₁ = $1.40 x (1 + 7%) = $1.498
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P₀ = $1.498 / (15% - 7%) = $1.498 / 8% = $18.725 ≈ $18.73 per stock

4 0
3 years ago
If the price of money (e.g., interest rates and equity capital costs) increases due to an increase in anticipated inflation, the
goldenfox [79]
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7 0
2 years ago
Which of the following illustrates an inflow of cash? a. a decrease in common stock b. a decrease in long-term debt c. a decreas
Alexeev081 [22]

Answer:

The answer is C.

Explanation:

A decrease in inventory means customers are buying inventories (goods) from the business. It is an inflow because money comes in.

Option A is incorrect because a decrease in common stock means shareholders are withdrawing their shareholding from the business and the business will pay them. This is an outflow.

Option B is incorrect because a decrease in long term debt means the business is paying its debt or redcuing its liability and this is an outflow.

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6 0
3 years ago
Reece is trying to increase the number of products he sells every week so he will get a promotion this year. What are accurate w
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Answer:

intermediate goal

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Explanation:

A goal is a desired result am individual wants to achieve in the future. Goals are usually time bound, that is they are meant to be achieved in a given time frame.

In the given instance Reece is trying to increase the number of products he sells every week so he will get a promotion this year.

With regards to duration goals can be short term, intermediate, or long term.

His goal of increasing weekly sales is an intermediate one.

Career goals are those that are measured by level of achievement on one's job. Reece is looking at getting a promotion in this year.

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2 years ago
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On January​ 2, 2019, Kaiman Corporation acquired equipment for​ $700,000. The estimated life of the equipment is 5 years or​ 80,
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$272,000

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Accumulated depreciation is the sum of depreciation expense.

Depreciation is a method of expensing the cost of an asset.

Depreciation expense using the straight line depreciation method = (Cost of asset - Salvage value) / useful life

($700,000 - $20,000) / 5 = $136,000

The straight line depreciation method Deprecation allocates the same deprecation expense each year of the useful life of an asset.

The depreciation expense in 2019 and 2020 would be $136,000 x 2 = $272,000

I hope my answer helps you

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2 years ago
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