In Its First Year of Business,Borden Corporation Had Sales of $2,000,000

question 96

Multiple Choice

In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) :

• A) \[\begin{array} { | l | l | l | }
• \hline \text { Accourits Receivable } & 2,000,000 & \\
• \hline \text { Sales } & & 2,000,000 \\
• \hline
• \end{array}\]
• B) \(\begin{array}{|l|r|r|}
• \hline \text { Sales returns and allowances } & 160,000 & \\
• \hline \text { Sales } & & 160,000 \\
• \hline \text { Cost of Goods Sold } & 96,000 & \\
• \hline \text { Inventory Returns Estimated } & & 96,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|r|r|}
• \hline \text { Sales } & 2,000,000 & \\
• \hline \text { Sales Refund Payable } & & 160,000 \\
• \hline \text { Accounts receivable } & & 1,840,000 \\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|l|l|}
• \hline \text { Sales Refund Payable } & 160,000 & \\
• \hline \text { Accounts receivable } & & 160,000 \\
• \hline
• \end{array}\)
• E) \(\begin{array}{|l|r|r|}
• \hline \text { Sales Returns and Allowances } & 160,000 & \\
• \hline \text { Sales Refund Payable } & & 160,000 \\
• \hline \text { Inventory Returns Estimated } & 96,000 & \\
• \hline \text { Cost of goods sold } & & 96,000 \\
• \hline
• \end{array}\)

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