In its first year of business, Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000. Borden expects returns in the following year to equal 8% of sales. The adjusting entry or entries to record the expected sales returns is (are):

Multiple Choice 1- Accounts Receivable 2,000,000 Sales 2,000,000

2- Sales returns and allowances 160,000 Sales 160,000 Cost of Goods Sold 96,000 Inventory Returns Estimated 96,000

3- Sales 2,000,000 Sales Refund Payable 160,000 Accounts receivable 1,840,000

4- Sales Refund Payable 160,000 Accounts receivable 160,000

5- Sales Returns and Allowances 160,000 Sales Refund Payable 160,000 Inventory Returns Estimated 96,000 Cost of goods sold 96,000