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fgiga [73]
3 years ago
9

Lavender Corporation sells 100 jars of essential oil to Bed, Bath, and Relax on December 1, 20X5, for $10 each. Lavender offers

a right to return the product for any reason. Based on past sales, Lavender expects Bed, Bath, and Relax to return 5 jars. What adjusting journal entry, if any, should Lavender record on December 31, 20X5, to reflect Bed, Bath, and Relax's right of return
Business
1 answer:
Slav-nsk [51]3 years ago
5 0

Sales Returned and Allowances $50

Allowance for Sales Return and Allowances $50

Lavender expects 5 jars at $10 each ($50 total) to be returned.

Explanation:

Lavender Corporation sells 100 jars of essential oil to Bed, Bath, and Relax on December 1, 20X5, for $10 each. Lavender offers a right to return the product for any reason. Based on past sales, Lavender expects Bed, Bath, and Relax to return 5 jars

<u>Using the above stated information we get  the given data :-</u>

Sales Returned and Allowances $50

Allowance for Sales Return and Allowances $50

Lavender expects 5 jars at $10 each ($50 total) to be returned.

<u>The adjusting journal entry on December 31 reflects</u>

  • The right of return by debiting Sales Returns and Allowances (a contra-revenue account) and
  • Crediting Allowance for Sales Returns and Allowances (a contra-asset account to Accounts Receivable).
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Answer:

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1. and 2.

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a. Cash                                asset                            Debit

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l. Common Stock                equity                          Credit

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