False Value Hardware began 2011 with a credit balance of $31,800 in the allowance for sales returns account. Sales and cash collections from customers during the year were $700,000 and $660,000,

False Value Hardware began 2011 with a credit balance of $31,800 in the allowance for sales returns account. Sales and cash collections from customers during the year were $700,000 and $660,000, respectively. False Value estimates that 5% of all sales will be returned. During 2011, customers returned merchandise for credit of $24,000 to their accounts.

What is the balance in the allowance for sales returns account at the end of 2011?

	$42,800.
	$59,000.
	$7,800.
	$35,000. Correct answer is $42,800. Explanation of the Answer is $31,800 + 35,000 ($700,000 × 5%) – 24,000 = $42,800 Wish you good luck!