Sales returns are inclusive of refunds, credits, or special price reductions known as allowances. Therefore, it is important to accrue returns and allowances at the time of sale, avoiding overstating the income statement.
Accounting will be FOR CREDIT SALES:
Accounting for returns, you will FOR CREDIT SALES:
Accounting for “Expecting” returns, you will FOR CREDIT SALES:
If the “expecting” does actualize to a sales return, you will FOR CREDIT SALES:
And the accounting for Correcting “Estimate of Sales Returns” for lower returns: