In Its First Year of Business,Borden Corporation Had Sales of $2,000,000

Multiple Choice

In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) :

A) $$\begin{array} { | l | l | l | } \hline \text { Accourits Receivable } & 2,000,000 & \\\hline \text { Sales } & & 2,000,000 \\\hline\end{array}$$
B) $\begin{array}{|l|r|r|}\hline \text { Sales returns and allowances } & 160,000 & \\\hline \text { Sales } & & 160,000 \\\hline \text { Cost of Goods Sold } & 96,000 & \\\hline \text { Inventory Returns Estimated } & & 96,000 \\\hline\end{array}$
C) $\begin{array}{|l|r|r|}\hline \text { Sales } & 2,000,000 & \\\hline \text { Sales Refund Payable } & & 160,000 \\\hline \text { Accounts receivable } & & 1,840,000 \\\hline\end{array}$
D) $\begin{array}{|l|l|l|}\hline \text { Sales Refund Payable } & 160,000 & \\\hline \text { Accounts receivable } & & 160,000 \\\hline\end{array}$
E) $\begin{array}{|l|r|r|}\hline \text { Sales Returns and Allowances } & 160,000 & \\\hline \text { Sales Refund Payable } & & 160,000 \\\hline \text { Inventory Returns Estimated } & 96,000 & \\\hline \text { Cost of goods sold } & & 96,000 \\\hline\end{array}$