If the company estimates that 9% of all sales will be returned. the year-end adjusting journal entry to account for anticipated sales returns would include a: Debit Sales Return $215,000; Credit Refund Liability $215,000.
<h3>Journal entry</h3>
The appropriate entry to record the transaction assuming the company record sales of the amount of $22,500,000 is:
Ashbaugh industries journal entry
Debit Sales Return $215,000
Credit Refund Liability $215,000
(To record anticipated sales )
Workings:
Anticipated sales = [(22,500,000 × 9%) - $1,810,000)]
Anticipated sales = $2,025,000 - $1,810,000
Anticipated sales = $215,000)
Therefore the company will have to Debit Sales Return for the amount of $215,000 and Credit Refund Liability for the amount of $215,000
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