A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A)Reflects an increase in amount due from a customer.
B)Recognizes that a customer returned merchandise and/or received an allowance.
C)Requires a debit memorandum to recognize the customer's return.
D)Is recorded when a customer takes a discount.
E)Reflects a decrease in amount due to a supplier.

Question

Quizplus · Accepted Answer

This transaction represents a customer returning merchandise or receiving an allowance, which results in a reduction of the amount owed by the customer. Therefore, Sales Returns and Allowances account is debited to reflect the decrease in sales revenue, while Accounts Receivable account is credited to reduce the amount due from the customer. No debit memorandum is needed because this is an internal accounting transaction.

A Debit to Sales Returns and Allowances and a Credit