The entry to record a sales return from a customer in the perpetual inventory system would require a(n)
A) decrease to Sales.
B) increase to Sales.
C) decrease to Sales Returns and Allowances.
D) increase to Sales Returns and Allowances.

Question

Quizplus · Accepted Answer

In the perpetual inventory system, a sales return from a customer would decrease Sales Returns and Allowances (contra-revenue account) and decrease Inventory (asset account) since the returned goods are no longer held for sale. Therefore, the entry to record a sales return from a customer in the perpetual inventory system would require an increase to Sales Returns and Allowances.

The Entry to Record a Sales Return from a Customer