On March 18,James Smith Purchased $5,000 of Furniture from Home $$\begin{array} { | c | r | r | } \hline \text { Sales Revenue } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$

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 $400 sales allowance for goods damaged in transit.Which of the following represents the correct way to record this transaction?

A) $$\begin{array} { | c | r | r | } \hline \text { Sales Revenue } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Refunds Payable } & 400 & \\\hline \text { Cash } & & 400 \\\hline & & \\\hline \text { Merchandise Inventory } & 240 & \\\hline \begin{array} { l } \text { Estimated Returns } \\\text { Inventory }\end{array} & & 240 \\\hline\end{array}$$
C) $$\begin{array} { | c | r | r | } \hline \text { Refunds Payable } & 400 & \\\hline \text { Accounts Receivable } & & 400 \\\hline\end{array}$$
D) $$\begin{array} { | l | l | l | } \hline \text { Sales Returns and } & & \\\text { Allowances } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$