Question

When sales are made with a right of return, the company ________.

a. records the returned asset in a separate inventory account.
b. records the estimated returns in the Sales Returns account.
c. should not recognize any revenue.
d. should recognize revenue for the full sales price.

Answer 1

a. records the returned asset in a separate inventory account.

Step-by-step explanation:

The sales represent the sales revenue for how much sales are made during a particular period.

If the sales are made having a right to return the inventory the same is to be recorded in the separate inventory account so that it could be easy to identify plus it will help at the time of preparing the financial statements