- A company sells significant amounts of merchandise during the month of June, the last month...

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- A company sells significant amounts of merchandise during the month of June, the last month of the second quarter. From many years of experience, the company's customers return significant quantities of the merchandise they buy in June. Normally, returns occur in the month of July. What accounting problem might result if the company recognizes all sales as revenue in June and all returns as sales returns and allowances in July? a. None, because the company is doing the right thing. b. Second quarter net income is overstated and third quarter net income is understated c. Second quarter net income is understated and third quarter net income is overestimated d. Net income is overestimated in both quarters. - A company sells significant amounts of merchandise during the month of June, the last month of the second quarter. From many years of experience, the company's customers return significant quantities of the merchandise they buy in June. Normally, returns occur in the month of July. What accounting problem might result if the company recognizes all sales as revenue in June and all returns as sales returns and allowances in July? a. None, because the company is doing the right thing. b. Second quarter net income is overstated and third quarter net income is understated c. Second quarter net income is understated and third quarter net income is overestimated d. Net income is overestimated in both quarters.

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The detailed answer for the above question is provided below The correct answer is b Second quarter ... View the full answer