A Customer Who Had Purchased $25,000 Worth of Merchandise on Account

question 55

Multiple Choice

A customer who had purchased $25,000 worth of merchandise on account returns 20% of this order to the seller because he is not satisfied with the quality of the goods.How would this entry be recorded on the books of the seller if historically the seller has had very few returns of this nature?

• A)
• \[\begin{array} { | l | r | r | }
• \hline \text { Sales } & 5,000 & \\
• \hline \text { Accounts Receivable } & & 5,000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 5,000 & \\
• \hline \text { Sales } & & 5,000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline \text { Sales Returns and Alllowances } & \mathbf { 5 , 0 0 0 } & \\
• \hline \text { Accounts Receivable } & & \mathbf { 5 , 0 0 0 } \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & \mathbf { 5 , 0 0 0 } & \\
• \hline \text { Sales Returns and Allowances } & & \mathbf { 5 , 0 0 0 } \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Sales } & 25,000 & \\
• \hline \text { Accounts Receivable } & & 25,000 \\
• \hline
• \end{array}\]

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