in its first year of business, laker corporation had sales of $2,150,000 and cost of goods sold of $1,275,000. laker expects returns in the following year to equal 5% of sales and 5% of cost of goods sold. the adjusting entry or entries to record the expected sales returns is (are):



Answer :

The Sales Returns and Allowances entry or entries are used to adjust for the anticipated sales returns. 160,000 Inventory Returns, 160,000 Sales Refund Due around 96,000 sold items cost was 96,000.

A sales return is an adjustment to sales resulting from the actual return of goods by a consumer who had previously purchased them from the Inventory Returns company. The account "Sales Returns and Allowances" is frequently used to record it.

Typically, a sales return is entered under "Sales Returns and Allowances." The income statement shows this account as a debit from "Sales" (or Gross Sales).

Actual physical returns of the product are required for sales returns, and Inventory Returns the consumer will receive a refund or credit to their account in exchange. Contrarily, a sales allowance occurs when the customer sales returns consents to accept the item for less than it was originally sold for. Both instances are classified as sales adjustments and are listed under "Sales Returns and Allowances."

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