On January 21,2014,Bessant Inc.received merchandise from Mullies Inc.On that date,it found a few of these goods to be damaged.On January 22,it returned the damaged goods to the seller.Such returns will be treated as ________ by Bessant.
A)purchase returns
B)sales returns
C)purchase allowances
D)sales allowances

Question

Quizplus · Accepted Answer

Bessant Inc. is returning damaged goods to Mullies Inc., which is the seller. These returns are considered purchase returns since Bessant Inc. purchased the merchandise from Mullies Inc. in the first place. Sales returns, on the other hand, would refer to customers returning merchandise to Bessant Inc. Purchases allowances and sales allowances are different from returns as they involve a reduction in the price of goods rather than a physical return of merchandise.