Quiz 7: Accounting for Sales and Accounts Receivable
A Customer Who Returns Goods or Receives an Allowance Is
A customer who returns goods or receives an allowance is entitled to a credit for the appropriate amount of sales tax if tax was charged on the original sale.
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A sales return or a sales allowance is usually recorded in the sales journal.
The balance of the Sales Returns and Allowances account is subtracted from the balance of the Accounts Receivable account in the Assets section of the balance sheet.
After all postings have been made,the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger.
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