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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Definitions:

Marginal Product Curve

A graph that displays the change in output that results from employing an additional unit of a particular input, holding all other inputs constant.

Money Wage Rate

The nominal rate of compensation employees receive for their labor per unit of time, not adjusted for inflation.

Levels of Production

The various stages through which the production of goods progresses, from raw materials to finished product.

Marginal Product Curve

A graphical representation that shows how the addition of a unit of labor or capital affects the output of production.