Question

A debit to Sales Returns and Allowances and a credit to Accounts Receivable: Multiple Choice Reflects an increase in amount due from a customer. Recognizes that a customer returned merchandise and/or received an allowance. Records the cost side of a sales return. Is recorded when a customer takes a discount. Reflects a decrease in amount due to a supplier.

Answer 1

Answer:

Recognizes that a customer returned merchandise and/or received an allowance.

Explanation:

When returning merchandise, sales return and allowances are debited to decrease sales and account receivable or cash is credited to refund / reduce cash company owes by the client. When a customer requires a cash refund, then we can only credit cash instead of account receivable because the debit entry is the same.

The journal entry is

Sales return and allowances XXXXX

        To Account receivable XXXXX

(Being the sales return is recorded)

It only shows and  records the returned merchandise