When merchandise that was sold on account is returned,which accounts are affected?

Question

Quizplus · Accepted Answer

When merchandise sold on account is returned, the sales returns account is credited, which decreases the revenue recognized from the original sale. The accounts receivable account is also credited because the customer is no longer responsible for paying for the returned merchandise. The merchandise inventory account is debited because the returned goods are no longer available for sale. Finally, the cost of goods sold account is credited, which reduces the cost of goods sold associated with the original sale. Therefore, option B is the correct answer.

When Merchandise That Was Sold on Account Is Returned,which Accounts