Lockern Co

question 108

Essay

Lockern Co. records estimated future sales returns and allowances. Total sales amount to $1,550,000, and, in the past, sales returns and allowances have been 2 1/2% of sales.
Required:
Prepare journal entries to:
a.Record the estimated sales returns and allowances.
b.Record the return of $1,000 of defective furniture.

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Definitions:

Banking Act

Legislation that regulates the operation of banks, establishes banking practices, and ensures the stability and integrity of the banking system.

Reserve Requirements

Central bank regulations that set the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves rather than lend or invest.

Checking Accounts

Bank accounts that allow for easy access to funds through checks, debit cards, and electronic transfers, used for daily transactions.

Open Market Operations

Central bank activities involving buying and selling government securities in the marketplace to influence the money supply and interest rates.