Homework Answers
Answer: Debit Sales Revenue and credit Cash for $620; debit inventory and credit Cost of Goods Sold for $500.
Explanation:
Under perpetual method, Journal entry for 'Sales returns' as follows;
| Account title and Explanation | Debit | Credit |
| Sales returns and Allowance | $620 | |
| Cash | $620 | |
| [To record sales returns] | ||
| Inventory | $500 | |
| Cost of goods sold | $500 | |
| [To record cost of sales returns] |
Thus,
Option 1 Debit cash and credit sales revenue for $620 is incorrect
Option 2 Debit inventory and credit cost of goods sold for $620 is incorrect
Option 3 Debit sales revenue and credit cash for $620; Debit cost of goods sold and credit inventory for $500 incorrect
Option 4 Debit Sales revenue and credit Cash for $620; debit inventory and credit cost of goods sold for $500 is Correct
Add Answer to:
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