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Credit memos are created when a product is returned. A debit to Sales Returns and Allowances and a credit to A/R is recorded when a
Credit memos are created when a product is returned. A debit to Sales Returns and Allowances and a credit to A/R is recorded when a credit memo is created. A credit memo will reduce A/R and write off the invoice. You have noticed that the A/R clerk, Wes, has created an abnormally high number of credit memos. You notice the inventory does not reflect the additional inventory resulting from the Sales Returns and Allowances. As a CFO, what would you do and how would you document this decision?
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