Answer:
The answers are C and D
Explanation:
In accounting, debit increases and credit decreases the following:
1. Asset
2. Expense
Also, debit decreases and credit increases the following:
1. Shareholders' equity
2. Liability
3. Sales or revenue or income.
The goods that was returned on May 15 is called Sales return. Because sales return reduces the sale that had been done before we will debit sales return.
Accounts Receivable is an asset and because the returned goods will reduce it, we will credit accounts receivable.
Answer:
A. CREDIT TO ALLOWANCE FOR SALES RETURNS
D. CREDIT TO ACCOUNTS RECEIVABLE
Explanation:
The journal entry for recording the sale should be:
May 1, sold goods on account
Dr Accounts receivable 100,000
Cr Sales revenue 100,000
The journal entry for recording the return of merchandise should be:
May 15, customer returns merchandise
Dr Allowance for sales returns 40,000
Cr Accounts receivable 40,000
*Allowance for sales returns reduces gross sales.
