Under a perpetual inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:
A)debit to Accounts Receivable for $250.
B)debit to Sales Returns and Allowances for $185.
C)credit to Sales Revenue for $250.
D)credit to Cost of Goods Sold for $185.

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, when inventory is returned, the seller debits Sales Returns and Allowances for the selling price ($250) and credits Accounts Receivable for the same amount. Additionally, the seller debits Inventory and credits Cost of Goods Sold for the cost of the inventory ($185).

Under a Perpetual Inventory System, the Entry to Record the Return