On July 10, 2020Headlands Ltd. sold GPS systems to retailers on account for a selling price of $ 1,000,000 (cost $800,000). Headlands grants the right to return systems that do not sell in three months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2 2020, retailers returned systems to Headlands and were granted credits of $ 85,000. The company follows IFRS.

Date Account Titles and Explanation Debit Credit October 10, Sales Returns and Allowances 150000 2020 Accounts Receivable 150000 (To record returns from customers) October 10. inv 2020 (To record return of inventory) October 10. 2020 (To adjust refund liability for end of right of return) October 10, 2020 (To adjust cost of goods sold for end of right of return)