A firm books a revenue of $900,000 in December 2016. Based on previous experience, 5% of the sales are returned within 30 days. Returned products are resalable. How much should the sales return allowance be in December 2016?
$45,000
$0
$108,000
$63,000
The sales return allowance is calculated by multiplying the total revenue by the return rate.
Sales return allowance = $900,000 * 0.05 = $45,000
Therefore, the correct answer is $45,000.