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Question - Fitness Equipment Incorporated (FEI) a public company allows customers the ability to return fitness equipment within 45 days for a full refund. FEI had a special promotion and sold 250 exercise bicycles to customers on Nov. 1, 2021. Customers paid cash for the bikes. Each bike was sold for $800 and the cost of each bike is $350. Based on past historical information 4% of all items sold are returned.
Required -
1) Provide the journal entries on November 1, 2021, to recognize the sale of the bikes. Assume no bikes were returned in November.
2) Provide the journal entries in December assuming 8 bikes are returned for a refund. No other items are returned and the period for a return has expired.
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