The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes
A)a debit to Accounts Receivable and a credit to Sales Returns and Allowances.
B)a debit to Sales Returns and Allowances and a credit to Accounts Receivable.
C)a debit to Sales and a credit to Sales Returns and Allowances.
D)a debit to Sales and a credit to Accounts Receivable.

Question

Quizplus · Accepted Answer

When a credit customer returns defective merchandise, the account credited should be Sales Returns and Allowances. And the account debited should be Accounts Receivable as the amount that was credited from the sale should be reduced. Since no sales tax was charged, there is no need to include a sales tax account in the entry. Hence, option B is the correct answer.

The Entry to Record a Return by a Credit Customer