Question
Hubbard Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All
Hubbard Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Hubbard's sales are for credit (no cash is collected at the time of sale). The company began 2020 with an allowance for sales returns of $200,000. During the year, Hubbard sold merchandise on account for $12,000,000. This merchandise cost Hubbard $8,520,000. Also during the year, customers returned $450,000 in sales for credit. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.
Question
What is the year-end balance in allowance for sales returns after the adjusting entry is recorded?
$480,000 | ||
$450,000 | ||
$230,000 | ||
$200,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started