In the current year, Borden Corporation had sales of $2,160,000 and cost of goods sold of $1,280,000. Borden expects returns in the following year to equal 7% of sales. The unadjusted balance in Inventory Returns Estimated is a debit of $22,000, and the unadjusted balance in Sales Refund Payable is a credit of $26,000. The adjusting entry or entries to record the expected sales returns is (are):
A.
| Sales Returns and Allowances | 125,200? | |
| Sales Refund Payable | 125,200? | |
| Inventory Returns Estimated | 67,600? | |
| Cost of Goods Sold | 67,600? |
B.
| Sales Refund Payable | 125,200? | |
| Accounts Receivable | 125,200? |
C.
| Sales Returns and Allowances | 125,200? | |
| Sales | 125,200? | |
| Cost of Goods Sold | 67,600? | |
| Inventory Returns Estimated | 67,600? |
D.
| Sales | 2,160,000? | |
| Sales Refund Payable | 151,200? | |
| Accounts Receivable | 2,008,800? |
E.
| Accounts Receivable | 2,160,000? | |
| Sales | 2,160,000? |
Answer: A
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