Question
Company sells clothing providing customers with the right to return the clothing within 60 days of...
Company sells clothing providing customers with the right to return the clothing within 60 days of the purchase and receive a full refund. For the current period Company has $800,000 in sales. Company can reliably estimate expected returns. Based on history, Company provides the following estimates of returns in dollar amounts:
70% probability that returns will be $50,000
30% probability that returns will be $40,000
Determine (net) sales revenue that Company will report for the period using the most likely amount method to account for returns
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