Under the perpetual inventory system,in addition to making the entry to record a sales return by a customer,a company would
A)increase Merchandise Inventory and decrease Cost of Goods Sold.
B)increase Cost of Goods Sold and decrease Purchases.
C)increase Cost of Goods Sold and decrease Merchandise Inventory.
D)make no additional entry until the end of the period.

Question

Quizplus · Accepted Answer

When a customer returns merchandise under the perpetual inventory system, the company must adjust its inventory to reflect the returned items. This involves increasing the Merchandise Inventory account (to add the returned items back into inventory) and decreasing the Cost of Goods Sold account (to reverse the cost of the sale that didn't ultimately occur).

Under the Perpetual Inventory System,in Addition to Making the Entry