Complete Question:
A customer returns merchandise that was delivered in poor condition and that does not meet specifications. The account that the seller would debit for the amount of the return is?
Group of answer choices
A. Sales Revenue
B. Purchases
C. Purchase Returns and Allowances
D. Sales Returns and Allowances
Answer:
D. Sales Returns and Allowances.
Step-by-step explanation:
If a customer returns merchandise that was delivered in poor condition and that does not meet specification. The account that the seller would debit for the amount of the return is Sales Returns and Allowances.
Sales returns in financial accounting refers to the account for recording any merchandise that is returned by a customer for a refund. Allowance is the privilege given to a customer by the retailer (seller) of a product for supplying a defective or improper merchandise. The sales returns and allowances usually makes up the contra-revenue account of a business which is typically deducted from sales.