On March 10, 2020, Tamarisk Company sold to Barr Hardware 220 tool sets at a price of $50 each (cost $32 per set) with terms of n/60, f. o.b. shipping point. Tamarisk allows Barr to return any unused tool sets within 60 days of purchase. Tamarisk estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned 7 tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Tamarisk sold them for cash. (a) Prepare journal entries for Tamarisk to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (3) any adjusting entries required on March 31, 2020 (when Tamarisk prepares financial statements). Tamarisk believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
No. Account Titles and Explanation Debit Credit
(1)
(To record cash sales)
(To record cost of goods sold)
(2)
(To record sales returns)
(To record cost of goods returned)
(3)
(Adjusting entry for sales returns)
(Adjusting entry for cost of goods sold)
b) Indicate the income statement and balance sheet reporting by tamarisk at March 31, 2020, of the information related to the Barr sales transaction.