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.
Required:
. Record the returns, assuming that cash refunds are paid to customers who had paid for their purchases.
. Record the returns, assuming that Swan and Bloom makes a credit to accounts receivable for all customers.
. Determine under what circumstances Swan and Bloom might credit accounts receivable even though the customer has paid for the merchandise.
Exercise