On March 10, 2025, Ivanhoe Company sold to Metlock Hardware 240 tool sets at a...
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On March 10, 2025, Ivanhoe Company sold to Metlock Hardware 240 tool sets at a price of $49 each ( cost $32 per set) with terms of n/60, f.o.b. shipping point. Ivanhoe allows Metlock to return unused tool sets within 60 days of purchase. Ivanhoe 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, 2025, Metlock returned 5 tool sets and received a credit to its account.
Prepare journal entries for Ivanhoe to record (1) the sale on March 10, 2025, (2) the return on March 25, 2025 and (3) any adjusting entries required on March 31, 2025. ( when Ivanhoe prepares financial statements). Ivanhoe believes the original estimate of return is correct.
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