Stossel Company sells 300 units for $200 each to Liberty Inc. for cash. Stossel allows Liberty to return any unused product within 30 days and receive a full refund. The cost of each product is $120. Stossel estimates that ten units will be returned, the costs of recovering the units will be immaterial, and the returned units are expected to be resold at a profit. What amount of Sales Returns and Allowances should Stossel record in the year of the sale? (a) $2,000. (b) $0. (c) $800. (d) $1,200.
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