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Lopez Company reports unadjusted first-year merchandise sales of $100,000 and cost of merchandise sales of...

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Accounting

Lopez Company reports unadjusted first-year merchandise sales of $100,000 and cost of merchandise sales of $30,000.
a. Compute gross profit using the unadjusted numbers above.
b-1.&2. The company expects future returns and allowances equal to 5% of sales and 5% of cost of sales. Prepare the year-end
adjusting entry to record the sales expected to be refunded and cost side of sales returns and allowances.
b-3. Recompute gross profit using the adjusted numbers from parts 1 and 2.
c. Is Sales Refund Payable an asset, liability, or equity account?
d. Is Inventory Returns Estimated an asset, liability, or equity account?
Complete this question by entering your answers in the tabs below.
Req A
Req B1 and B2
Req C and D
Compute gross profit using the unadjusted numbers above.
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