The records of Garden Company indicate sales of $900,000, cost of goods sold of $500,000, an ending inventory balance of $100,000, and estimated returns of 1% of sales. The adjusting journal entries to record estimated returns will include a

The adjusting journal entries to record estimated returns will include:

Debit to Sales for $9,000

Explanation:

As the returns account is the contra sales account and it is adjusted with the sales value. Due to credit nature of sales the adjusting entry for a contra account will be debited to make the sales value net of returns.

Sales = $900,000

Estimated return = 1% of Sales

Returns Value = $900,000 x 1%

Returns Value = $9,000

c is the correct answer.