Rusty Hardware Makes Only Cash Sales

question 145

Multiple Choice

Rusty Hardware makes only cash sales. It began 2018 with a credit balance of $32,000 in the refund liability account. Sales during 2018 were $600,000. Rusty estimates that 6% of all sales will be returned. During 2018, customers returned merchandise for credit of $28,000 to their accounts.
-What is the balance in the allowance for sales returns account at the end of 2018?

• A) $32,000.
• B) $39,000.
• C) $43,000.
• D) $40,000.

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Definitions:

Transfer Program

Government initiatives designed to redistribute income across different sectors of the population through mechanisms like welfare benefits or social security payments.

Federal Level

Pertaining to the national government, as opposed to state, local, or municipal levels, dealing with issues that affect the country as a whole.

Property Income

Income derived from the ownership of real estate, financial assets, or intellectual property, including rents, dividends, and interest earnings.

Personal Income

The total earnings received by an individual from all sources before taxes, including wages, dividends, and interest payments.