Question

a customer of juice store returned merchandise with a cost of $25 and a selling price of $40. juice store gave the customer a cash refund because the customer had previously paid their account in full. the journal entry to record the cash refund to the customer includes: multiple choice question. a debit to sales returns and allowances and a credit to cash for $40 a debit to sales returns and allowances and a credit to cash for $25 a credit to sales returns and allowances and a debit to cash for $25 a debit to merchandise inventory and a credit to cost of goods sold for $25

Answer 1

The journal entry to record the cash refund to the customer includes a debit to Sales Returns and Allowances and a credit to Cash for $40.

An item is returned to the seller by a customer or client as a sales return.

• Refund policies are customizable by businesses. There are other options, such as allowing free returns within a set time limit, imposing a restocking cost, or only allowing returns with a receipt. A shop credit or exchange may be available from some businesses. Accountants can enter these transactions in a sales returns account after confirming a return complies with a company's policy.

• An allowance is a reserve set aside in anticipation of costs that will arise at a later time. By creating a reserve, a cost that would have otherwise been recognized in a later period is instead recognized sooner, into the present period.

Learn more about Sales return, here

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