Here are some numbers to use while considering the prior post about sales returns. For the current ratio, assume that current liabilities are $3M, that the following entries were the only entries made, and that the beginning current ratio is 1.
Tag: sales returns
Sales returns: Gross Profit, Refund Liability, Inventory Estimated Returns
To understand sales returns and the unique accounts that are used for them (Refund liability and Inventory estimated returns), let’s start by reviewing the journal entry for the sale of goods. It raises gross profit (in green) by taking this form: A/R (or cash) $Retail Sales revenue $Retail COGS $Cost Inventory $Cost Now let’s look […]