(Appendices) SALES RETURNS. Swan and Bloom, Inc., is a wholesaler of novelty items to small stores. All sales are on credit with no discount offered. During March, Swan and Bloom accepted the following sales returns:

a) Johnson Company returned merchandise with a list price of $600. Johnson had not yet paid for the returned merchandise.

b) Becker Bargains returned merchandise with a list price of $750. Becker had paid for the merchandise.

c) Fifth Avenue Market returned merchandise with a list price of $200. The bill for the returned merchandise had been paid.

d) Thorn Catering returned merchandise with a list price of $600. Thorn had paid for the merchandise. : LO7 REQUIRED:

1. Record the returns, assuming that cash refunds are paid to customers who had paid for their purchases.

2. Record the returns, assuming that Swan and Bloom makes a credit to accounts receivable for all customers.

3. Under what circumstances might Swan and Bloom credit accounts receivable even though the customer has paid for the merchandise?