For the year ended december 31, 2019, davidson mart had sales of $800,000 and cost of goods sold of $600,000. davidson estimates that approximately 2% of the merchandise sold will be returned. the adjusting journal entry on december 31, 2019, would include
a) credit to refunds payable for $40,000
b) debit to cost of goods sold for $30,000
c) debit to sales revenue for $10,000
d) credit to estimated returns inventory for $ 3

A) credit to Refunds Payable for $40,000

Explanation:

ed merchandise will increase our inventory and lower the cost of goods sold.

Also, it will decrease our net sales.

However, it is important to notice we are doing a provision, the returned didn't occur yet.

800,000 x 2% = 40,000 expected refund

sales returns and allowance 40,000

    refund liability   40,000

When the customer returns good we will do:

refund liability  debit

cash credit

when the goods were already paid

or

refund liability debit

account receivable credit

when not paid, and simply deducted from the customer accounts.

answer: heh

explanation:

d. to get countries or companies to stop doing something objectionable.