Which of the following statements is correct about accounting for expected sales returns?
A)Expected returns are disclosed in the notes to the financial statements,but journal entries are not required.
B)Since no inventory has yet been received,a liability,Inventory-Estimated Returns,is credited for the cost of the expected returned items.
C)Since no cash has yet been paid,a liability,Refund Liability,is credited for the sales price of expected returns.
D)Sales Revenue will be debited and Cost of Goods Sold will be credited for the sales price of expected returns.

Question

Quizplus · Accepted Answer

For month-end adjustments for expected returns,cash has not been received so a liability called Refund Liability is credited.Also,inventory has not yet been returned,it is only expected to be returned.An account called Inventory-Estimated Returns is used.Cost of Goods Sold will be credited for the cost of items expected to be returned.

Which of the Following Statements Is Correct About Accounting for Expected