Sue's Jewelry sold 30 necklaces for $25 each to a credit customer.The invoice included a 6% sales tax and payment terms of 2/10,n/30.In addition,5 necklaces were returned prior to payment.The entry to record the return would include:

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The return of 5 necklaces at $25 each would result in a reduction of sales revenue of $125, which should be recorded as a debit to Sales Returns and Allowances. The sales tax portion of the return ($7.50, calculated as 6% of $125) should be credited to Sales Tax Payable. There is no need to adjust the Accounts Receivable account since the customer has not yet paid and the return does not affect the amount owed.

Sue's Jewelry Sold 30 Necklaces for $25 Each to a Credit