On March 18,James Smith Purchased $5,000 of Furniture from Home $$\begin{array} { | c | r | r | } \hline \text { Sales Revenue } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$

question 134

Multiple Choice

On March 18,James Smith purchased $5,000 of furniture from Home Furnishings on account.The cost of the goods was $3,000.On March 20,Home Furnishings granted the customer a $400 sales allowance for goods damaged in transit.Which of the following represents the correct way to record this transaction?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Sales Revenue } & 400 & \\
• \hline \text { Cash } & & 400 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Refunds Payable } & 400 & \\
• \hline \text { Cash } & & 400 \\
• \hline & & \\
• \hline \text { Merchandise Inventory } & 240 & \\
• \hline \begin{array} { l }
• \text { Estimated Returns } \\
• \text { Inventory }
• \end{array} & & 240 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Refunds Payable } & 400 & \\
• \hline \text { Accounts Receivable } & & 400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | l | }
• \hline \text { Sales Returns and } & & \\
• \text { Allowances } & 400 & \\
• \hline \text { Cash } & & 400 \\
• \hline
• \end{array}\]

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