15.

Which of the following is true?

Allowance for sales returns and allowances is a contra revenue account

Sales returns and allowances is a contra asset account

When estimating future allowances, the company needs to reduce its accounts receivable

When granting an allowance, the company needs to reduce its accounts receivable

16.

Company Y grants an allowance due to defective goods. Which of the following is true?

Company Y credits sales returns and allowances

Company Y credits allowance for sales and returns and allowances

Company Y debits accounts receivable

Company Y credits accounts receivable