Reference no: EM132678682

To promote the sale of some specialty goods, Kingbird Ltd. began a generous return policy to its customers. Customers can return merchandise for up to three months following the date of the invoice, no questions asked. For the current period, sales of these specialty goods totalled $39,500. Kingbird chooses to estimate any expected sales returns at the end of each reporting period, rather than recording the Refund Liability at the point of sale. At the end of the reporting period, Kingbird estimates that outstanding returns will be $2,780.

Problem 1: Assuming Kingbird follows IFRS, prepare the required adjusting journal entry at the end of the reporting period. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.