Reference no: EM132203496

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?:

Initial amount CR 372

DR 443

CR 425

Total: CR 354