USM records $120,000 of sales in the month of December 2020. USM estimates that $10,000 of returns of December sales will eventually be returned. As of December 31, 2020, $2,000 of returns have been processed. Assuming zero balance in the refund liability account, what is the effect of the entry necessary at December 31 to record estimated returns? Omit the cost of sales entry. Group of answer choices: a,) Decrease revenues and increase liabilities for $8,000 b.) Decrease revenues and increase liabilities for $10,000 c.) Increase expenses and Increase Liabilities for $8,000 d.) Increase expenses and Increase Liabilities for $10,000 e.) None of the above
USM records $120,000 of sales in the month of December 2020. USM estimates that $10,000 of returns of December sales will eventually be returned. As of December 31, 2020, $2,000 of returns have been processed. Assuming zero balance in the refund liability account, what is the effect of the entry necessary at December 31 to record estimated returns? Omit the cost of sales entry. Group of answer choices: a,) Decrease revenues and increase liabilities for $8,000 b.) Decrease revenues and increase liabilities for $10,000 c.) Increase expenses and Increase Liabilities for $8,000 d.) Increase expenses and Increase Liabilities for $10,000 e.) None of the above
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 4PA: Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The...
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USM records $120,000 of sales in the month of December 2020. USM estimates that $10,000 of returns of December sales will eventually be returned. As of December 31, 2020, $2,000 of returns have been processed. Assuming zero balance in the refund liability account, what is the effect of the entry necessary at December 31 to record estimated returns? Omit the cost of sales entry.
Group of answer choices:
a,) Decrease revenues and increase liabilities for $8,000
b.) Decrease revenues and increase liabilities for $10,000
c.) Increase expenses and Increase Liabilities for $8,000
d.) Increase expenses and Increase Liabilities for $10,000
e.) None of the above
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