Jog Ltd Employs a Perpetual Inventory System $\quad$ $\quad$

question 21

Multiple Choice

Jog Ltd employs a perpetual inventory system.When a customer returns merchandise to Jog Ltd that he purchased on credit,which of these entries would Jog Ltd make?

• A) Dr Accounts receivable\(\quad \)\(\quad \) Cr Sales returns
• B) Dr Sales returns\(\quad \)\(\quad \)\(\quad \)\(\quad \) Cr Cash
• C) Dr Sales returns \(\quad \)\(\quad \)\(\quad \)\(\quad \)Cr Accounts receivable
• D) Dr Cash \(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)Cr Accounts receivable

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Definitions:

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable, acknowledging potential losses on credit sales.

Carrying Amount

The book value of assets and liabilities as reported on the balance sheet, after deducting any accumulated depreciation or amortization.

Accounts Receivable

Receivables from clients for goods delivered or services performed by a company, awaiting payment.

Allowance Method

An accounting technique used to estimate and deduct bad debts from accounts receivable.