Question

quizlet during 2024, its first year of operations, ashbaugh industries recorded sales of $22,500,000 and experienced returns of $1,810,000. returns are accounted for as they occur, with additional estimated returns accrued at the end of the period. cost of goods sold totaled $13,500,000 (60% of sales). 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:

Answer 1

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.

Journal entry

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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