During the year, sales returns and allowances totaled $80,000. The cost of the merchandise returned was $48,000.

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During the year, sales returns and allowances totaled $80,000. The cost of the merchandise returned was $48,000. The accountant recorded all the returns and allowances by debiting the sales account and crediting Cost of Merchandise Sold for $80,000. 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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Financial Accounting

ISBN: 978-1133952428

12th Edition

Authors: Warren, Reeve, Duchac

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