Question

Your answer is partially correct. Try again. To promote the sale of some specialty goods, Marin Ltd. began a generous return policy to its customers. Customers can return merchandise for up to three months following the date of the invoice, no questions asked. For the current period, sales of these specialty goods totalled $40,600. Marin chooses to estimate any expected sales returns at the end of each reporting period, rather than recording the Refund Liability at the point of sale. At the end of the reporting period, Marin estimates that outstanding returns will be $3,210. Assuming Marin follows ASPE and records expected outstanding returns to Allowance for Sales Returns and Allowances. Prepare the required adjusting journal entry at the end of the reporting period. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Account Titles and Explanation Debit Credit enter an account titleEntry field with incorrect answer enter a debit amountEntry field with incorrect answer enter a credit amountEntry field with correct answer enter an account titleEntry field with incorrect answer enter a debit amountEntry field with correct answer enter a credit amountEntry field with incorrect answer

Answer 1

the journal entry would be as follows

	Account titles
	sales return and allowances	$3210
	accounts receivable		$3210

in sale revenue section of income statement sales return and allowances will be deducted. sales return and allowances is Contra Revenue account.

Account receivable is lessened by that amount too.