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Henderson Corp. sells merchandise for $480,000 with a cost of $216,000 in the month of June. The company estimates total returns to be equal to

Henderson Corp. sells merchandise for $480,000 with a cost of $216,000 in the month of June. The company estimates total returns to be equal to 3% of June sales. Actual returns for the month for items sold in June totaled $10,000. The credit balance in Refund Liability on June 1 is $2,400. Omit consideration of the cost of sales entry.

What is included as part of the entries to estimate returns at month-end?

A debit to refund liability for $900

A debit to sales returns for $1,980

Debit to Sales Returns for $4,400

Credit to refund liability for $2,000

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