Question

Memorex Disks sells computer disk drives with right-of-return privileges. Returns are material and reasonably predictable. Memorex should:________
i. Debit sales returns in the period of the return.
ii. Debit sales in the period of the return.
iii. Not record sales until the right to return has expired.
iv. Record a refund liability in the year of the sale.

Answer 1

Memorex should: iv. record a refund liability in the year of the sale.

What is a right-of-return privilege?

A right-of-return privilege can be defined as a special right, advantage or entitlement that is accorded to a customer, which avails them an opportunity to return a product they have purchased.

Since Memorex Disks offers its customers right-of-return privileges, it is expected that it should record a refund liability in the year of the sale i.e recording an allowance for sales returns in the year the sale was made.

Read more on right-of-return privilege here: brainly.com/question/17165436

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