Answer:
Please refer to the below explanations.
Explanation:
A.
Sales return and allowance a/c Dr $613,000
To accounts receivable A/c Cr $613,000
(Being retuned goods that is recorded)
Merchandise inventory A/c Dr $429,100
($613,000 × 70%)
To cost of goods sold A/c Cr $429,100
(Being cost of goods sold that was recorded)
Estimated return is therefore;
= Sale value of merchandise × return percentage - actual return
= $12,500,000 × 5% - $613,000
= $625,000 - $613,000
= $12,000
B.
Sales return and allowance A/c Dr $12,000
To accounts receivable A/c Cr $12,000
(Being returned goods that were recorded)
Merchandise inventory A/c Dr $8,400
($12,000 × 70%)
To cost of goods sold A/c Cr $8,400
(Being cost of goods sold that were recorded)
Therefore, the computation for the year end allowance for sales return is same as $8,400.
