Question

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​ _______.

Answer 1

Adjusting journal entry on December 31, 2019 is as follows:
Debit - Sales Returns and allowances - 16,000.00
Credit - Accounts Receivable - 16,000.00