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) :

Question

Business

Claudia Barron

15 January, 12:53

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) :

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Answers (1)

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Hoffman · Answer 1

The adjusting entry are shown below.

Explanation:

According to the scenario, the adjusting entry that can be shown are as follows;

Journal Entry

Sales return and allowance A/c Dr $160,000

To sales refund payable A/c $160,000

(Being Sales return is recorded)

The computation is shown below:

For sales return:

= $2,000,000 * 8%

= $160,000

Journal Entry

Inventory Returns A/c Dr $96,000

To Cost of goods sold A/c $96,000

(Being the cost of goods is recorded)

The computation is shown below:

For inventory return:

= $1,200,000 * 8%

= $96,000