On August 5, Michaels Ltd. sells goods for $1,500 and the cost to Michaels was $800. Michaels expects a return rate of 5%. On August 12, goods with a selling price of $400 and a cost of $215 are returned for credit and restored to inventory. The journal entry to record the return will include

Select one:

a. credit to Estimated Inventory Returns for $215.

b. debit to Accounts Receivable for $400.

c. credit to Refund Liability for $400.

d. credit to Inventory for $215.