The Sk8 Shop sold 10 skateboards to a local summer adventure camp for $135 each at a

Question:

The Sk8 Shop sold 10 skateboards to a local summer adventure camp for $135 each at a cost of $95. After five days, the summer camp decided to return two of the unused skateboards and limit the class size to eight students. The Sk8 Shop uses a perpetual inventory system. Which of the following journal entries is correct to record the customer’s return:

a. Dr. Sales Returns and Allowances $135
Cr. Accounts Receivable $135

b. Dr. Sales Returns and Allowances $270
Cr. Accounts Receivable $270

c. Dr. Merchandise Inventory $190
Cr. Cost of Goods Sold $190

d. Dr. Cash $270
Cr. Sales Discounts $270

e. Dr. Sales Returns and Allowances $190
Cr. Accounts Receivable $190

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...

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