In its first year of business, Borden Corporation had sales of $2,040,000 and cost of goods sold of $1,220,000. Borden expects returns in the following year to equal 7% of sales. The adjusting entry or entries to record the expected sales returns is (are):
A.
| Accounts Receivable | 2,040,000? | |
| Sales | 2,040,000? |
B.
| Sales Returns and Allowances | 142,800? | |
| Sales Refund Payable | 142,800? | |
| Inventory Returns Estimated | 85,400? | |
| Cost of goods sold | 85,400? |
C.
| Sales returns and allowances | 142,800? | |
| Sales | 142,800? | |
| Cost of Goods Sold | 85,400? | |
| Inventory Returns Estimated | 85,400? |
D.
| Sales | 2,040,000? | |
| Sales Refund Payable | 142,800? | |
| Accounts receivable | 1,897,200? |
E.
| Sales Refund Payable | 142,800? | |
| Accounts receivable | 142,800? |
Answer: B
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