Question
During its first year of operations, Magenta Company recorded sales of $21,000,000. Based on industry statistics, Magenta estimates 8% of all sales will be returned.
During its first year of operations, Magenta Company recorded sales of $21,000,000. Based on industry statistics, Magenta estimates 8% of all sales will be returned. Actual returns during the year totaled $1,400,000. The year-end adjusting journal entry to account for estimated sales returns would include a:
| a. | None of the options | |
| b. | Debit to Sales Returns of $1,680,000 | |
| c. | Debit to Refund Liability of $1,680,000 | |
| d. | Credit to Sales Returns of $280,000 | |
| e. | Credit to Refund Liability of $280,000 |
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Financial Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
2nd Edition
0471347744, 978-0471347743
