The seller issues a credit memo for $700 for damaged merchandise to the buyer, and the merchandise was not returned by the buyer. Which of the following is the effect on the financial statements of the selling company?

a). The accounts receivable account decreases by $700, and the inventories account increases by $700.
b). The accounts payable account decreases by $700, and the inventories account decreases by $700.
c). The accounts receivable account decreases by $700, and the customer refunds payable account decreases by $700.
d). The accounts payable account decreases by $700, and the customer refunds payable account increases by $700.

Answer rating: 100% (QA)

Accounts receivable account decreases by 700 and the r... View the full answer