On March 18, James Smith Purchased $5,000 of Furniture from Home

On March 18, James Smith purchased $5,000 of furniture from Home Furnishings on account. The cost of the goods was $3,000. On March 20, Home Furnishings granted the customer a $1,000 sales allowance for goods damaged in transit. Which of the following represents the correct way to record this transaction?

A) $$\begin{array} { |l | r | r | } \hline \text { Sales Revenue } & 1,000 & \\\hline \text { Cash } & & 1,000 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Refunds Payable } & 1,000 & \\\hline \text { Cash } & & 1,000 \\\hline & & \\\hline \text { Merchandise Inventory } & 600 & \\\hline \text { Estimated Returns Inventory } & & 600 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Refunds Payable } & 1,000 & \\\hline \text { Accounts Receivable } & & 1,000 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Sales Returns and Allowances } & 1,000 & \\\hline \text { Cash } & & 1,000 \\\hline\end{array}$$