GiGi's Sporting Goods uses special journals.If a credit customer returns $400 of goods on which $24 of sales tax was charged,the journal entry to record the return would include:
A) a debit to the Sales account for $424.
B) a credit to the Sales Tax Payable account for $24.
C) a debit to the Sales Returns and Allowances account for $400.
D) a credit to the Accounts Receivable account for $400.

Question

Quizplus · Accepted Answer

The journal entry to record the return would include a debit to the Sales Returns and Allowances account for $400, as the goods are being returned by the customer. There is no need to include a debit to the Sales account, as the sale has been reversed due to the return. There is also no need to credit the Sales Tax Payable account as the tax was already accounted for in the original sale. The Accounts Receivable account should be credited for $400 to reflect that the customer no longer owes that amount, but this option is not listed as a choice.

GiGi's Sporting Goods Uses Special Journals