Question

Probuilder, in its first year of operations ending June 30, reports merchandise sales of $84,000 and cost of merchandise sales of $29,400. The company makes fiscal-year-end adjusting entries for estimated future returns and allowances equal to 1% of sales, or $840, and 1% of cost of sales, or $294.

Question:
What is the net amount after considering the adjusting entries for estimated returns and allowances?

A. $54,120
B. $53,866
C. $54,900
D. $53,112

Answer 1

The net amount after considering the adjusting entries for estimated returns and allowances is $53,112.

Step-by-step explanation:

To calculate the net amount after considering the adjusting entries for estimated returns and allowances, we need to subtract the estimated returns and allowances from the merchandise sales and cost of merchandise sales. The estimated returns and allowances for merchandise sales is 1% of $84,000, which is $840, and for cost of merchandise sales is 1% of $29,400, which is $294.

Therefore, the net amount after considering the adjusting entries for estimated returns and allowances is $84,000 - $840 - ($29,400 - $294) = $84,000 - $840 - $29,400 + $294 = $53,112.