Wellington Company Had Sales This Year of $2,180,000 and Cost

question 167

Multiple Choice

Wellington Company had sales this year of $2,180,000 and cost of goods sold of $1,050,000. Wellington expects returns and allowances in the following year to equal 6% of sales, half being returns of goods and half allowances for merchandise kept by the buyer. The adjusting entry or entries to record the expected sales returns is(are) :

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Definitions:

Production Possibilities Curve

A graph that shows the various combinations of goods and services that an economy can produce given its resources and technology.

Capacity Utilization

The percentage of a firm's or nation's total production capacity that is actually being used over a specific time period.

Passive Resource

A passive resource refers to an economic asset that requires no active management or labor input to generate income or value.

Capital

Assets or resources that are used to generate income or make an investment, including buildings, machinery, and equipment.