Cypress,Inc.sold merchandise for cash to a customer.The customer returned some of that merchandise because it was not satisfactory.What journal entry will Cypress use to record the return?
A)Debit Sales Revenue and credit Inventory.
B)Debit Cash and credit Sales Revenue.
C)Debit Cost of Goods Sold and credit Inventory.
D)Debit Sales Revenue and credit Cash.

Question

Quizplus · Accepted Answer

The company will debit Sales Revenue (or Sales Returns & Allowances)and credit Cash for the selling price of the merchandise.In addition,because a perpetual inventory system updates these accounts,it will debit Inventory and credit Cost of Goods Sold for the cost of the merchandise.