A credit granted to a customer for returned goods requires a debit to
A) Sales Revenue and a credit to Cash.
B) Sales Returns and Allowances and a credit to Accounts Receivable.
C) Accounts Receivable and a credit to a contra-revenue account.
D) Cash and a credit to Sales Returns and Allowances.

Question

Quizplus · Accepted Answer

When a customer returns goods, the seller needs to adjust the original sale. This is done by debiting (increasing) Sales Returns and Allowances, which is a contra-revenue account that reduces total sales revenue, and crediting (decreasing) Accounts Receivable to reflect the reduction in the amount the customer owes.

A Credit Granted to a Customer for Returned Goods Requires