A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A) Reflects an increase in amount due from a customer.
B) Is recorded when a customer takes a discount.
C) Records the cost side of a sales return.
D) Reflects a decrease in amount due to a supplier.
E) Recognizes that a customer returned merchandise and/or received an allowance.

Question

Quizplus · Accepted Answer

A debit to Sales Returns and Allowances and a credit to Accounts Receivable recognizes that a customer returned merchandise and/or received an allowance. Option A is incorrect as it reflects an increase in amount due from a customer, which is not the case of sales returns and allowances. Option B is incorrect as a customer taking a discount would be recorded through a debit to Sales Discount and a credit to Accounts Receivable. Option C is incorrect as it records the cost side of a sales return, but does not reflect the actual return by the customer. Option D is incorrect as it reflects a decrease in amount due to a supplier, which is not related to sales returns and allowances.

A Debit to Sales Returns and Allowances and a Credit