At the end of its first year of operations, Loring Industries estimates that sales returns in the amount of $20,000 will occur during Year 2. The cost of the inventory expected to be returned is $12,000. All of Lorings sales are made for cash and the company uses a perpetual inventory system. Assume that no returns have occurred as of the end of Year 1. Prepare the appropriate adjusting journal entry to record the expected sales returns and the inventory expected to be returned in Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Knowledge Check 01 At the end of its first year of operations, Loring Industries estimates that sales returns in the amount of $20,000 will occur during Year 2. The cost of the inventory expected to be returned is $12,000. All of Loring's sales are made for cash and the company uses a perpetual inventory system. Assume that no returns have occurred as of the end of Year 1. Prepare the appropriate adjusting journal entry to record the expected sales returns and the inventory expected to be returned in Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) | View transaction list Journal entry worksheet Record the $20,000 estimate of expected returns from customers. Note: Enter debits before credits. Event General Journal Credit Debit 20,000 Sales returns Pecord entre Clear entry Viewsneraliournal