Question

On December 31, the company estimates future sales refunds to be $900. As of that date, the company has an unadjusted debit balance in Accounts Receivable of $25,000 and an unadjusted credit balance of $300 in Sales Refunds Payable.

Requried:
Write down the necessary adjusting entry.

Answer 1

Date Account titles and Explanation Debit Credit

Dec 31 Sales return and allowance $600

Sales refund payable $600

($900 - $300)

(To record the expected refund of sales)