Question

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit Accounts Receivable and debit:____
A. Sales Revenue.
B. Sales Discounts.
C. Sales Returns.
D. Sales Allowances.

Answer 1

Answer:

C. Sales Returns.

Explanation:

The journal entry for returned material is shown below:

Sales return A/c Dr

      To Account receivable A/c

(Being the receipt of returned material is recorded)

For returned material, We simply debited the sales return account and credited the account receivable account so that the exact item can be reported correctly.

Hence, the most appropriate option is c.