Record journal entries for prior period returns

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Reference no: EM132765574

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. Do not forget about the related COGS and inventory entries.

Reference no: EM132765574

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