When management estimates a rate for return, at the time of sale this requires
A)a debit to Sales revenue for the estimated returns.
B)a credit to Refund Liability for the estimated returns.
C)no entry for the estimated returns.
D)a debit to Refund Liability for the estimated returns.

Question

Quizplus · Accepted Answer

When management estimates a rate for return at the time of sale, it requires a credit to Refund Liability for the estimated returns. This creates a liability on the books for the expected amount of sales that will be returned.

When Management Estimates a Rate for Return, at the Time