During the year, sales returns and allowances totaled $235,750. The cost of the merchandise returned was $141,450.

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During the year, sales returns and allowances totaled $235,750. The cost of the merchandise returned was $141,450. The accountant recorded all the returns and allowances by debiting the sales account and crediting Cost of Merchandise Sold for $235,750. Was the accountant’s method of recording returns acceptable? Explain. In your explanation, include the advantages of using a sales returns and allowances account.

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Financial Accounting An Integrated Statements Approach

ISBN: 978-0324312119

2nd Edition

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

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