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a. Note 22 reports that the balance in Pearson's provision for sales returns was 372 at December 31, 2008 and 254 at December 31, 2009. Under U.S. GAAP, this contra account is typically referred to as an "allowance" and reflects the company's anticipated sales returns.
i) Complete a T-account that shows the activity in the provision for sales returns account during the year. Assume that Pearson estimated that returns relating to 2009 Sales to be 425 million. In reconciling the change in the account, two types of journal entries are required, one to record the estimated sales returns for the period and one to record the amount of the actual book returns.
What I did for the T account:
Provision for Sales Returns
Initial amount CR 372
CR 53
DR 71
Total: CR 354
Is this correct? Or this?:
DR 443
CR 425
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