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bulgar [2K]
3 years ago
5

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 2018 with an allowance for sales returns of $400,000. During 2018, Halifax sold merchandise on account for $12,500,000. This merchandise cost Halifax $8,750,000 (70% of selling prices). Also during the year, customers returned $613,000 in sales for credit. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance. 2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Business
1 answer:
Minchanka [31]3 years ago
7 0

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.

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Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are al
inna [77]

Answer:

From maintenance to department B will be allocated 85,333 dollars

Explanation:

We distribute maintenance over personnel and operating and then,

we distributed the accumulated in personnel over the operating department:

\left[\begin{array}{cccccc}&Maintenance&Personnel&Dep A&Deb B\\$maintenance-hours&&800&960&640\\$employes&&&160&480\\$Direct \: Cost&320,000&80,000&160,000&240,000\\$Allocate A&-320,000&106,667&128,000&85,333\\$Subtotal&&186,667&288,000&325,333\\$Allocate J&&-186,667&46,667&140,000\\$Total&&&334,667&465,333\\\end{array}\right]

<em><u>For the given question it would be:</u></em>

total maintenance-hours: 800  + 960 + 640 = 2,400

<u>allocation of maintenance:</u>

320,000 x   640/2400 = 85,333

4 0
3 years ago
Peking Palace Company reported the following: Standard quantity per unit 3 lbs. Standard price per pound $2.75 Actual pounds use
SCORPION-xisa [38]

Answer:

$577.5 favorable

Explanation:

Data provided in the question:

Standard quantity per unit 3 lbs

Standard price per pound = $2.75

Actual pounds used = 15,000 lbs

Actual price per pound = $2.90

Number of units produced = 5,070

Now,

The direct materials quantity variance is given as;

= | ( Actual quantity - Standard quantity ) | × Standard price

= ( 15,000 lbs - {Standard quantity per unit × units produced}) × $2.75

=  ( 15,000 lbs - { 3 × 5,070}) × $2.75

= | ( 15,000 lbs - 15,210 ) | × $2.75

= $577.5

Since,

Standard quantity is higher than the actual quantity

thus,

$577.5 favorable

7 0
3 years ago
Lulzbot sells 6,000 units of its product for $500 each. The selling price includes a one-year warranty on parts. It is expected
Olin [163]

Answer:

$3,000

Explanation:

Warranty expense is an obligation on the business because business is liable to accept the claims of warranty. A estimated percentage of warranty expense is charges as an expense in each period.

Total Sales = $500 x 6,000 units = $3,000,000

Warranty Expense for the year = Sales units x 3% x warranty cost per unit

Warranty Expense for the year = 6,000 x 3% x $50 = $9,000

Recognised warranty cost in the year = 120 units x $50 = $6,000

Accrued Warranty expense = $9,000 - $6,000 = $3,000

5 0
3 years ago
An automobile tier II supplier has been offered a contract to supply a gearbox to a car company. The initial price of the gearbo
Fudgin [204]

Answer:

:

The contract is worth $1,622,970,237.98

Explanation:

Given

Number of Years = 12

Initial Price = $389

Initial Units = 500,000

Unit Increment = 2%

Price Decrement = $7.5

At Year 0:

$389 * 500,000 = $194,500,000

The Initial price would continue to decrease by $7.5

And the Initial units would continue to increase by 2%.

So,

At Year 1:

($389 - $7.5) * (500,000 * 2% + 500,000)

= $381.5 * 510,000 = $194,565,000

At Year 2:

($381.5 - $7.5) * (510,000 * 2% + 510,000)

= $374 * 520,200 = $194,554,800

At Year 3:

($374 - $7.5) * (520,200 * 2% + 520,200)

= $366.5 * 530,604 = $194,466,366

At Year 4:

$359 * $541,216 = $194,296,5736

At Year 5:

$351.5 * $552,040 = $194,042,2017

At Year 6:

$344 * $563,081 = $193,699,9368

At Year 7:

$336.5 * $574,343 = $193,266,3649

At Year 8:

$329 * $585,830 = $192,737,96810

At Year 9:

$321.5 * $597,546 = $192,111,13011

At Year 10:

$314 * $609,497 = $191,382,12412

At Year 11:

$306.5 * $621,687 = $190,547,113

Calculating present worth of contract (at 6%)

By adding the result of 0.06 * present value at each year.

Net Present Value = $1,622,970,237.98

8 0
3 years ago
Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. I
monitta

Answer:

The answer is : The payment to common shareholders will total $19,500

Explanation:

Because preferred share has priority to receive dividend over common shares, the amount of dividend declaration must fulfill the firm's commitment to its preferred shareholders before the residual amount may be distributed among common shareholders.

Amount of dividend needs to be paid to preferred share holders = Number of share x Par value per preferred share x % dividend = 1,000 x 10 x 5% = $500.

The residual amount of dividend declaration which will go to common shareholders = 20,000 - 500 = $19,500.

=> Thus, the answer is $19,500.

6 0
3 years ago
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