ABC Skiing Essentials uses special journals. If a credit customer returns $8,000 of goods on which
$560 of sales tax was charged, select the correct entry to record the return:

Question

Quizplus · Accepted Answer

Recording a sales return requires debiting Sales Returns and Allowances, crediting Accounts Receivable for the amount of goods returned, and crediting Sales Tax Payable for the amount of sales tax charged on the returned items. Choice A reflects this three-way entry, resulting in a net credit of $8,560. Choice B only records the return of the goods and the sales tax charged, without reducing the Accounts Receivable balance. Choice C records only the return of the goods, without accounting for the sales tax charged. Choice D records only the return of the goods, without reducing the Accounts Receivable balance or accounting for the sales tax charged.

ABC Skiing Essentials Uses Special Journals