Pharoah Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases $4400 of products (cost $2200). Assuming that based on prior experience, estimated returns are 30%. The journal entry to record the expected sales return and cost of goods sold includes aa. credit to Allowance for Sales Returns for $250. b. credit to Returned Inventory for $125. c. debit to Returned Inventory for $125. d. debit to Estimated Inventory Returns for $125.

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Business

Kennedy Spears

15 May, 06:02

Pharoah Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases $4400 of products (cost $2200). Assuming that based on prior experience, estimated returns are 30%. The journal entry to record the expected sales return and cost of goods sold includes aa. credit to Allowance for Sales Returns for $250. b. credit to Returned Inventory for $125. c. debit to Returned Inventory for $125. d. debit to Estimated Inventory Returns for $125.

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Answers (1)

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Kadin · Answer 1

Journal entries

Explanation:

The journal entries are shown below:

Sales Returns & Allowance $1,320 ($4,400 * 30%)

To Account Receivable $1,320

(Being the sales return is recorded)

Sales Returns & Allowance $660 ($2,200 * 30%)

To Cost of Goods Sold $660

(Being the sales return is recorded)

Note: This is the answer but the same is not provided in the given options