Using a perpetual inventory system,what is the correct journal entry when a customer returns a product that was purchased on account?
A) A debit to Sales Returns & Allowances and a credit to Accounts Receivable; and a debit to Inventory and a credit to Cost of Goods Sold
B) A debit to Cash and a credit to Sales Returns & Allowances; and a debit to Inventory and a credit to Cost of Goods Sold
C) A debit to Accounts receivable and a credit to Sales Returns & Allowances; and a debit to Cost of Goods Gold and a credit to Inventory
D) A debit to Sales Returns & Allowances and a credit to Accounts Receivable

Question

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When a customer returns a product, the sales return is recorded by debiting Sales Returns & Allowances and crediting Accounts Receivable. Additionally, the inventory is increased by debiting Inventory and crediting Cost of Goods Sold to reflect the return of the product to inventory.

Using a Perpetual Inventory System,what Is the Correct Journal Entry