Question

A credit granted to a customer for returned goods requires a debit to a. Accounts Receivable and a credit to a contra-revenue account. b. Cash and a credit to Sales Returns and Allowances. c. Sales Revenue and a credit to Cash. d. Sales Returns and Allowances and a credit to Accounts Receivable.\

Answer 1

Answer:

d. Sales Returns and Allowances and a credit to Accounts Receivable.

Explanation:

The entry to record credit granted to customer entails :

Decrease the Assets of Accounts Receivable (credit entry) and Decrease the Sales Revenue (debit entry).

The Recognition of Sales Return and Allowance decreases Sales Revenue.