Schurz Company uses the periodic inventory method.After negotiations with one of its customers concerning the color of the merchandise sold to that customer,Schurz allowed the customer to return all of the merchandise and issued a credit memorandum to that customer for $3,000.The merchandise,which had a cost of $1,750,was restored to inventory.How would the company record this transaction?
A)Debit Accounts Receivable for $3,000,debit Merchandise Inventory for $1,750,and credit Sales Returns and Allowances for $3,750.
B)Debit Accounts Receivable for $3,000,credit Sales Returns and Allowances for $3,000,debit Merchandise Inventory for $1,750,and credit Purchase Returns and Allowances for $1,750.
C)Debit Accounts Receivable for $3,000,credit Sales Returns and Allowances for $3,000,debit Cost of Goods Sold for $1,750,and credit Merchandise Inventory for $1,750.
D)Debit Accounts Receivable for $3,000,credit Sales Returns and Allowances for $3,000,debit Merchandise Inventory for $1,750,and credit Cost of Goods Sold for $1,750.
E)Debit Sales Returns and Allowances for $3,000 and credit Accounts Receivable for $3,000.

Question

Quizplus · Accepted Answer

The correct entry for a sales return involves debiting Sales Returns and Allowances and crediting Accounts Receivable for the amount of the return.

Schurz Company Uses the Periodic Inventory Method