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Chico Company allows its customers to return merchandise within 30 days of purchase. - At December 31, the end of its first year of operations, Chico estimates future-period merchandise returns of $71,000 (cost of $28,000 ) related to its current-year sales. - A few days later, on January 3 , a customer returns merchandise with a selling price of $2,550 for a cash refund; the returned merchandise cost $860 and is returned to inventory as it is not defective. a. Prepare the December 31 year-end adjusting journal entry for estimated future sales returns and allowances (revenue side). b. Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). c. Prepare the January 3 journal entries to record the merchandise returned. Journal entry worksheet A few days later, on January 3 , a customer returns merchandise with a selling price of $2,550 for a cash refund. Note: Enter debits before credits. Journal entry worksheet Record the adjusting journal entry for estimated future inventory returns and allowances (cost side). Note: Enter debits before credits. Journal entry worksheet Record the adjusting entry for estimated future sales returns and allowances (revenue side). Note: Enter debits before credits. Journal entry worksheet A few days later, on January 3 , the returned merchandise cost $860 and is returned to inventory as it is not defective. Note: Enter debits before credits

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