During the year, sales returns and allowances totaled $55,000. The cost of the merchandise returned was $33,000.

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During the year, sales returns and allowances totaled $55,000. The cost of the merchandise returned was $33,000. The accountant recorded all the returns and allowances by debiting the sales account and crediting Cost of Merchandise Sold for $55,000.

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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Corporate Financial Accounting

ISBN: 978-1133952411

12th edition

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

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