Question: During the year, sales returns and allowances totaled $90,000. The cost of the merchandise returned was $54,000. The accountant recorded all the returns and allowances

During the year, sales returns and allowances totaled $90,000. The cost of the merchandise returned was $54,000. The accountant recorded all the returns and allowances by decreasing the sales account and decreasing Cost of Merchandise Sold for $90,000.

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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