Acme Enterprises,which uses a perpetual inventory system,recorded a debit to Sales Returns & Allowances and a credit to Accounts Receivable.(No other accounts were affected.)What business event must have taken place?
A) The customer received a damaged product, but kept the product and asked for a reduction in the price.
B) The customer received a damaged product and returned it.
C) The customer received a discount because the invoice was paid on time.
D) The customer sent in a partial payment and promised to pay the balance next month.

Question

Quizplus · Accepted Answer

The entry indicates a reduction in sales revenue due to a return or allowance. A debit to Sales Returns & Allowances and a credit to Accounts Receivable suggests the customer kept the product but received a price reduction, which aligns with option A.

Acme Enterprises,which Uses a Perpetual Inventory System,recorded a Debit to Sales