9 December, 07:23

# Lavender Corporation sells 100 jars of essential oil to Bed, Bath, and Relax on December 1, 20X5, for \$10 each. Lavender offers a right to return the product for any reason. Based on past sales, Lavender expects Bed, Bath, and Relax to return 5 jars. What adjusting journal entry, if any, should Lavender record on December 31, 20X5, to reflect Bed, Bath, and Relax's right of return

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1. 9 December, 09:12
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Sales Returned and Allowances \$50

Allowance for Sales Return and Allowances \$50

Lavender expects 5 jars at \$10 each (\$50 total) to be returned.

Explanation:

Lavender Corporation sells 100 jars of essential oil to Bed, Bath, and Relax on December 1, 20X5, for \$10 each. Lavender offers a right to return the product for any reason. Based on past sales, Lavender expects Bed, Bath, and Relax to return 5 jars

Using the above stated information we get the given data : -

Sales Returned and Allowances \$50

Allowance for Sales Return and Allowances \$50

Lavender expects 5 jars at \$10 each (\$50 total) to be returned.

The adjusting journal entry on December 31 reflects

The right of return by debiting Sales Returns and Allowances (a contra-revenue account) and Crediting Allowance for Sales Returns and Allowances (a contra-asset account to Accounts Receivable).