Question

Netherland Corporation has the following unadjusted balances: Accounts Receivable, $88,000 (debit), and Allowance for Sales Discounts $380 (credit). Of the receivables, $58,000 of them are within the 4% discount period, and Netherland expects buyers to take $2,320 in future-period discounts ($58,000 × 4%) arising from this period’s sales. The adjusting entry to estimate sales discounts is (are):

• Accounts Receivable	88,000
  Sales		88,000

• Sales Discounts	58,000
  Sales		58,000
  Cost of Goods Sold	2,320
  Inventory Returns Estimated		2,320

• Sales Discounts	1,940
  Allowance for Sales Discounts		1,940

• Sales Discounts	2,320
  Accounts receivable		2,320

• Sales Discounts	2,320
  Allowance for Sales Discounts		2,320

Answer 1

The journal entry would be

Sales Discount 2320

.......allowance for sales discount 2320

Option E is the answer