Question

On September 12, Ryan Company sold merchandise in the amount of $9,200 to Johnson Company, with credit terms of 3/10, n/30. The cost of the items sold is $5,700. Ryan uses the periodic inventory system and the net method of accounting for sales. On September 14, Johnson returns some of the non-defective merchandise, which is restored to inventory. The selling price of the returned merchandise is $840 and the cost of the merchandise returned is $520. The entry or entries that Ryan must make on September 14 is (are): Multiple Choice Sales returns and allowances 815 Accounts receivable 815 Sales returns and allowances 815 Accounts receivable 815 Merchandise inventory 504 Cost of goods sold 504 Sales returns and allowances 840 Accounts receivable 840 Sales returns and allowances 520 Accounts receivable 520 Sales returns and allowances 815 Accounts receivable 815 Merchandise inventory 520 Cost of goods sold 520

Answer 1

Date	Account titles and explanation	Debit	Credit
Sep 14	Sales returns and allowances	$815
	Accounts receivable		$815
	(To record sales return by a customer)

Sales return and allowances= Sales price-Discounted amounted

= $840-3%*840= $815

So, the answer is option A) Sales returns and allowances 815 Accounts receivable 815