On December 1, 2012, SuperTech Sold 100 Locks for Laptop

question 43

Multiple Choice

On December 1, 2012, SuperTech sold 100 locks for laptop computers at $50 each with a 90-day unconditional right of return. Since this is a new product for SuperTech, it has no past history regarding estimated returns. Which of the following is true regarding SuperTech's December 31, 2012 financial statements?

• A)Sales of $5,000 should only be recognized in 2013 when the return privilege expires.
• B)Sales of $5,000 should be recognized in 2012 as long as there is a reserve for returns.
• C)Sales of $5,000 should be recognized in 2012, with future costs accrued as an estimated liability.
• D)Sales should only be recognized as the related cash is collected.