When the seller accepts a return of goods from the purchaser originally sold on account, the seller's journal entry would include a debit to:
A)Sales Discounts and credit to Cash.
B)Sales Returns and Allowances and credit to Accounts Receivable.
C)Sales Returns and Allowances and credit to Sales Discounts.
D)Sales Revenue and credit to Cash.

Question

Quizplus · Accepted Answer

When a seller accepts a return of goods that were originally sold on account, the seller needs to reverse the revenue recognized from the sale. This is done by debiting Sales Returns and Allowances (which reduces the total sales revenue recognized) and crediting Accounts Receivable (which reduces the amount owed by the customer).

When the Seller Accepts a Return of Goods from the Purchaser