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Electron Inc (El) sells products with a right to return within 6 months. On October 15th, El sold $1,000,000 worth of product which had a
Electron Inc (El) sells products with a right to return within 6 months. On October 15th, El sold $1,000,000 worth of product which had a gross margin percentage of 35%. Based on historical experience, El expects 10% of the product to be returned within the return period. Between the date of sale and El's December 31st year-end, $10,000 worth of product was returned to El. What will El report as a refund liability and accounts receivable as of Dec 31, 2020? El will collect payment for this product in January of 2021. a) Refund liability: $90,000; A/R: $990,000 b) Refund liability: $35,000, A/R: $1,000,000 c) Refund liability: $100,000; A/R: $1,000,000 d) Refund liability: $31,500; A/R: $990,000
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