Chico Company allows its customers to return merchandise within 30 days of purchase

Chico Company allows its customers to return merchandise within 30 days of purchase. At December 31, 2016, the end of its first year of operations, Chico estimates future period merchandise returns of $60,000 (cost of $22,500) related to its 2016 sales. On January 3, 2017, a customer returns merchandise with a selling price of $2,000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective. Prepare the December 31, 2016, year-end adjusting journal entry for estimated future sales returns and allowances (revenue side). Prepare the December 31, 2016, year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). Prepare the January 3, 2017, journal entry(ies) to record the merchandise returned.

Sony introduces a new compact music player to compete with Apple’s iPod that carries a two-year

Sony introduces a new compact music player to compete with Apple’s iPod that carries a two-year warranty against manufacturer’s defects. Based on industry experience with similar product introductions, warranty costs are expected to be approximately 3% of sales. By the end of the first year of selling the product, total sales are $31 million, and actual warranty expenditures are $300,000. What amount (if any) should Sony report as a liability at the end of the year?