Which of the following explanations details what caused the journal entry below to occur?

$\backslash$table$[[$Inventory$],[$Cost of Goods Sold$],[$Sales Returns and Allowances$],[$Deferred Revenue$]]$

Multiple Choice

Received merchandise returned by customers as unsatisfactory $($but in perfect condition$)$ for cash refund.

Received merchandise returned by customers as unsatisfactory $($but in perfect condition$)$ issuing a gift card.

Purchase return of merchandise that was purchased on account.