If returned merchandise is not damaged and can be sold again, the seller must record two journal entries. What will the seller record as the second journal entry?
A) Sales Returns and Allowances Accounts Receivable
B) Accounts Receivable Sales
C) Inventory Cost of Goods Sold
D) Inventory Accounts Receivable

Question

Quizplus · Accepted Answer

The second journal entry reflects the restocking of the inventory, which involves increasing (debiting) Inventory and decreasing (crediting) Cost of Goods Sold to reverse the cost of the sale.

If Returned Merchandise Is Not Damaged and Can Be Sold