If merchandise costing $500 that was sold cash at a price of $620 is returned by the customer,how would this transaction recorded when using a perpetual inventory system?

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Using a perpetual inventory system, the return of the merchandise would be recorded by debiting Sales Returns & Allowances (contra-revenue account) and crediting Cash for $620. Then, Inventory would be debited and Cost of Goods Sold would be credited for the cost of the merchandise returned, which in this case is $500. Therefore, the entry would be: Debit Sales Returns & Allowances and credit Cash for $620; debit Inventory and credit Cost of Goods Sold for $500.

If Merchandise Costing $500 That Was Sold Cash at a Price