Multiple Choice
On December 1, 2021, SuperTech sold 100 locks for laptop computers at $50 each with a 90-day unconditional right of return. Since this is a new product for SuperTech, it has no past history regarding estimated returns. Which of the following is TRUE regarding SuperTech's December 31, 2021 financial statements?
A) Sales of $5,000 should only be recognized in 2022 when the return privilege expires.
B) Sales of $5,000 should be recognized in 2021 as long as there is a reserve for returns.
C) Sales of $5,000 should be recognized in 2021, with future costs accrued as an estimated liability.
D) Sales should only be recognized as the related cash is collected.
Correct Answer:
Verified
Correct Answer:
Verified
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