Tessier sells cameras with a right of return. For its December 20X1 sales, it recognised a refund liability of 6,000. At the reporting date of 31 December 20X1, in the light of observed return trends (no refund has yet been paid), it reduces its estimate of expected refunds to 4,500. Record the entry adjusting the refund liability; the corresponding adjustment to the asset for the right to recover products is recorded in a separate entry not requested here.
- Refund liability recognised
- 6,000
- Re-estimated expected refunds
- 4,500