Final answer:
Meissner should debit Sales Returns and Allowances for $2,500 and credit Accounts Receivable for the same amount to account for estimated merchandise returns. The accounting profit of a firm with $1 million in sales and $950,000 in various costs is $50,000.
Step-by-step explanation:
When Meissner sells merchandise on account and estimates that customers will return 5% of the merchandise, the appropriate accounting entry to record the estimated sales returns is a debit to the Sales Returns and Allowances account and a credit to Accounts Receivable.
To calculate the amount to debit and credit, you multiply the total sales by the return percentage. Thus, $50,000 x 5% = $2,500. Therefore, Meissner should debit Sales Returns and Allowances for $2,500 and credit Accounts Receivable for $2,500, reflecting the estimation that customers will return merchandise worth this amount.
Now, let's address the self-check question. A firm's accounting profit is calculated by subtracting the total expenses from total sales revenue. In this case:
- Sales Revenue: $1,000,000
- Labor Costs: $600,000
- Capital Costs: $150,000
- Materials Costs: $200,000
- Total Costs: $600,000 + $150,000 + $200,000 = $950,000
- Accounting Profit: $1,000,000 - $950,000 = $50,000
The accounting profit for the firm is
$50,000
.