Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting accounts receivable and debiting:

Question

Quizplus · Accepted Answer

The reduction in price given to the customer is considered a sales allowance, which is a reduction in the selling price of goods sold to customers. Therefore, the correct account to debit in this scenario would be sales allowances.