Question: When a customer returns merchandise for a cash refund or allowance, which of the following is the correct way to record receipt of the returned

When a customer returns merchandise for a cash refund or allowance, which of the following is the correct way to record receipt of the returned inventory?

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Cash is increased by the cost of the goods returned, and Inventory is decreased by the same amount.

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Inventory is increased by the selling price of the goods returned, and Cash is decreased by the same amount.

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Inventory is increased by the cost of the goods returned, and Estimated Returns Inventory is decreased by the same amount.

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Estimated Returns Inventory is increased by the cost of the goods returned, and Inventory is decreased by the same amount.

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