Under a perpetual inventory system, when goods are returned to the retailer from a customer:

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Quizplus · Accepted Answer

Under a perpetual inventory system, when goods are returned to the retailer from a customer, the Sales Returns and Allowances account is debited, and the Cost of Goods Sold account is credited. This is because the returned goods are deducted from the cost of goods sold and recognized as a reduction in revenue. Therefore, choice B is the best answer.

Under a Perpetual Inventory System, When Goods Are Returned to the Retailer