Arrow Company sold merchandise costing $3,600 for $10,500 cash. All of the merchandise was later returned...
Arrow Company sold merchandise costing $3,600 for $10,500 cash.
All of the merchandise was later returned by the customer. If the
perpetual inventory method is used, what effect will the sales
return have on the accounting equation?
|
A. |
Total assets and total equity increase by $3,600. |
|
B. |
Total assets increase by $3,600 and total equity is decreased by $10,500. |
|
C. |
Total assets and total equity decrease by $3,600. |
|
D. |
Total assets and total equity decrease by $10,500. |
Homework Answers
Sales of Costing $ 3,600 for $ 10,500
It means revenue generated = $ 10,500
Cost of Goods sold = $ 3,600
Later Material is return by customer,
Material is returned by customer it means assets will increase by $ 3,600
Revenue will reverse it means total equity will be decreased y $ 10,500
Answer = Option B = Total assets increase by $3,600 and total equity is decreased by $10,500
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