Spring company give the customer an allowance on their account for merchandise t

Question

Spring company give the customer an allowance on their account for merchandise that was damaged in shipping. The invoice has not been paid and the goods were not return to spring company. The journal entry would include

A a debit to sales returns and allowances and a credit to Accounts Payable

B A debit accounts receivable and a credit to sales returns and allowances

C A debit to sales returns and allowances and a credit to accounts receiveablw

D A debit to merchandise inventory and a credit to sales returns and allowances

E none of these

Explanation / Answer

Answer is C. Debit to sales return and allowance and a credit to Accounts receivable.

Explanation:

The allowance allowed to customer for damage goods will decrease the accounts receivable balance and hence is credited to account and it will be treated as sales return and allowance to be debited with the account.

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