Using the information provided in BE8- 21, prepare the journal entry to record $ 5,000 of actual sales returns within one year after revenue was recognized by Botti.
In BE8-21
Botti Incorporated manufactures and sells professional ski equipment. Botti offers a money- back guarantee for one year after the date of purchase. Cash sales for the current year amounted to $ 620,000. Botti estimates that 5% of all sales are returned within the one- year period. Cost of goods sold are 75% of sales. The company uses a perpetual inventory system. Record sales and estimated sales returns for the current year.