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orres Corp. estimates its sales returns at the end of each month. On December 1, 2022, Torres Corp.’s “Sales Return Liability” account had a normal balance of $10,000. During December, the company had customer sales totaling $600,000 and actual returns of $12,000.   At the end of December, Torres estimates sales returns related to December’s sales will be $8,000.    Question: What should be the “Sales Return Liability” account balance on 12/31/22 after all entries have been made?

orres Corp. estimates its sales returns at the end of each month. On December 1, 2022, Torres Corp.’s “Sales Return Liability” account had a normal balance of $10,000. During December, the company had customer sales totaling $600,000 and actual returns of $12,000.   At the end of December, Torres estimates sales returns related to December’s sales will be $8,000.    Question: What should be the “Sales Return Liability” account balance on 12/31/22 after all entries have been made?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 6RE: Smith Company is required to charge customers an 8% sales tax on all goods it sells. At the time of...
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Torres Corp. estimates its sales returns at the end of each month. On December 1, 2022, Torres Corp.’s “Sales Return Liability” account had a normal balance of $10,000. During December, the company had customer sales totaling $600,000 and actual returns of $12,000.

 

At the end of December, Torres estimates sales returns related to December’s sales will be $8,000. 

 

Question: What should be the “Sales Return Liability” account balance on 12/31/22 after all entries have been made?

  1. $10,000
  2. $8,000
  3. $6,000
  4. $18,000
  5. $4,000

 

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