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Question - Scott Company had sales of $12,000,000 and related cost of goods sold of $7,100,000 for the year ending December 31, 20Y8. Scott provides customers a refund for any returned or damaged merchandise. Scott Company estimates that customers will request refunds for 0.6% of sales and estimates that merchandise costing $55,000 will be returned in 20Y9.
Required - Journalize the adjusting entries on December 31, 20Y8, to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account titles.
What information is provided in the statements that will assist you in making these business decisions? What information is not provided that could assist in managerial decision making?
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