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False Value Hardware began 2018 with a credit balance of $33,000 in the allowance for sales...

False Value Hardware began 2018 with a credit balance of $33,000 in the allowance for sales returns account. Sales and cash collections from customers during the year were $640,000 and $600,000, respectively. False Value estimates that 8% of all sales will be returned. During 2018, customers returned merchandise for credit of $19,000 to their accounts.

What is the balance in the allowance for sales returns account at the end of 2018?

Multiple Choice

  • $65,200.

  • $14,000.

  • $51,200.

  • $70,200.

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Answer #1

Solution:

balance in the allowance for sales returms = Beginning balance + Current Current estimated returns - actual returns

= $33000 + ($640000*8%) - $19000

= $65,200

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