When journalizing for the estimated sales returns,there would be a debit to:
A)Sales Refunds Payable.
B)Cost of Goods Sold.
C)Sales Returns and Allowances.
D)Accounts Receivable.

Question

Quizplus · Accepted Answer

Sales returns and allowances account is debited when there is an estimated sales return because it is a contra revenue account that reduces the amount of sales revenue. The other options are not correct as Sales Refunds Payable is a liability account that is credited when a refund is owed to a customer, Cost of Goods Sold is not affected by an estimated sales return, and Accounts Receivable is not affected until the actual return occurs.

When Journalizing for the Estimated Sales Returns,there Would Be a Debit