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24 May, 04:07

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) :

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  1. 24 May, 05:11
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    The adjusting entry are shown below.

    Explanation:

    According to the scenario, the adjusting entry that can be shown are as follows;

    Journal Entry

    Sales return and allowance A/c Dr $160,000

    To sales refund payable A/c $160,000

    (Being Sales return is recorded)

    The computation is shown below:

    For sales return:

    = $2,000,000 * 8%

    = $160,000

    Journal Entry

    Inventory Returns A/c Dr $96,000

    To Cost of goods sold A/c $96,000

    (Being the cost of goods is recorded)

    The computation is shown below:

    For inventory return:

    = $1,200,000 * 8%

    = $96,000
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