Accounting question?

if a company that sells magazines has a full refund policy where the customer, if not fully satisfied, can get a full refund.





the estimated percent of dissatisfied customers who do take advantage of this policy is 25%.





what should the account be called in the balance sheet where this estimation should go?





I was thinking something like %26quot;allowance for full refunds%26quot; or %26quot;allowance for refunds%26quot; or something like that...





What do you guys think?? any help would be appreciated :-)
Accounting question?
If the refund policy is 100% of the value of the sub, then a liability account such as you describe will need to be setup. It wouldn%26#039;t matter what you%26#039;d call it, but I%26#039;d say allowance for cancellations to be accurate. However, if the refund is only going to be given for the un-delivered copies, then there should not be a liability because all that revenue should be held in an %26#039;unearned revenue%26#039; type of account until the issues are delivered. Then, little by little, the unearned revenue will move to a revenue account over time. If someone should request a refund of undelivered copies, then the unearned revenue account (a liabililty) will be debited and credit (decrease) to cash would be the entry.