Final answer:
The two journal entries required to record the return of merchandise from customers for a cash refund are debiting Sales Returns and Allowances and crediting Cash for the refund amount; and debiting Inventory and crediting Cost of Goods Sold for the restocked merchandise.
Step-by-step explanation:
To address the question, what are the two journal entries required to record the return of merchandise from customers for a cash refund, one must consider the accounting process for sales returns. When a customer returns merchandise that they have previously purchased, it impacts both the inventory and the cash balances for the business. Therefore, two distinct journal entries are required to accurately reflect this transaction in the company's financial records.
The first journal entry would involve debiting the Sales Returns and Allowances account and crediting the Cash account. This entry effectively reverses a portion of the original sale.
The second journal entry would involve debiting the Inventory account and crediting the Cost of Goods Sold account. This reflects the restocking of the returned merchandise and the associated adjustment to the cost of goods that were initially recognized as sold.
All in all, these entries ensure that the company's financial statements accurately reflect the return of merchandise and the refund of cash to the customer.