An entity sells fitness equipment to customers with an unconditional right of return if they are...
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An entity sells fitness equipment to customers with an unconditional right of return if they are not satisfied. The right of returns extends 50 days. On February 20, 2020, a customer purchases $6,000 of products (cost $3,000) for cash. Assuming that based on prior experience, estimated returns are 20%. On March 10, 2020, the customer returns of $400 of merchandise. On March 31, 2020, the entity prepares financial statements. The journal entry to accrue the estimated return includes a a, credit to Refund Liability for $400. O b. credit to cost of goods solgifor $800. O c. credit to Account Receivable for $800. O d. debit to Estimated Inventory Returns for $400. An entity sells fitness equipment to customers with an unconditional right of return if they are not satisfied. The right of returns extends 50 days. On February 20, 2020, a customer purchases $6,000 of products (cost $3,000) for cash. Assuming that based on prior experience, estimated returns are 20%. On March 10, 2020, the customer returns of $400 of merchandise. On March 31, 2020, the entity prepares financial statements. The journal entry to accrue the estimated return includes a a, credit to Refund Liability for $400. O b. credit to cost of goods solgifor $800. O c. credit to Account Receivable for $800. O d. debit to Estimated Inventory Returns for $400.
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Answer rating: 100% (QA)
ANSWER A Credit to Refund liability for 400 The expected return is the profit or loss that an invest... View the full answer
Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
Posted Date:
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