Ivanhoe Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases $3000 of products (cost $1500). Assuming that based on prior experience, estimated returns are 10%. The journal entry to record the expected sales return and cost of goods sold includes a. a.credit to Refund Liability for $200.
b. credit to Returned Inventory for $100.
c. credit to Estimated Inventory Returns for $100.
d. debit to Estimated Inventory Returns for $100.

The journal entry to record the expected sales return and cost of goods sold includes a

a.credit to Refund Liability for $200.

Explanation:

Ivanhoe Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases $3000 of products (cost $1500). Assuming that based on prior experience, estimated returns are 10%. The journal entry to record the expected sales return and cost of goods sold includes aa.credit to Refund Liability for $200.The refund liability shows the amount of consideration that means the company does not expect to be entitled  because it will be refunded to customers.The liability should be represented for the amount of revenue expected to be refunded.Also the returns and refunds are disadvantageous for business for a product.

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