Question

question 5 of 6
a customer receives damaged merchandise purchased on account for $37. no sales tax was charged on this merchandise.
what journal entry is used to record this transaction?

Explanation:

Step1: Determine the accounts affected

The customer is returning damaged merchandise purchased on account. So, Accounts Receivable (which was increased when the sale was made on account) will decrease, and Sales Returns and Allowances (a contra - revenue account) will increase.

Step2: Record the journal entry

Debit Sales Returns and Allowances (to increase the contra - revenue account) and credit Accounts Receivable (to decrease the asset account).

The journal entry is:
Debit Sales Returns and Allowances $37
Credit Accounts Receivable $37

Answer:

Debit Sales Returns and Allowances $37; Credit Accounts Receivable $37