Record journal entries for prior period returns

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Question - Adjusting entry for sales returns was not recorded (all other return-related transactions were recorded during the year). Returns are accounted for as they occur, with additional estimated returns accrued at the end of the period. Assume 40% cost of sales for these returns. Lehigh Jeans estimates an additional $18,000 to be returned in 2022 for 2021 sales. All 2020 sales are outside the return period. Refund liability had a beginning balance of $15,000. During the year, customers returned merchandise with a sales price of $34,000, of which $15,000 were returns from sales in previous periods. Record journal entries for prior period returns and the adjusting entry at the end of the period.

Reference no: EM132763472

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