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Secure I https//www.natha.com/Student/PlayerTest.aspx?testid-1 67194710&centenin;=yes ACC 2213-B Pd Fa17 Test: Chapter 5 Exam This Question: 1 pt 23of29(28 complete) Regarding the end of period adjusting entries to record estimated sales returns, which of the following statements is comect? (Assume the porpetual inventory system is used) O A. Both Sales Revenue and Cost of Goods Sold accounts are decreased. O B. Companies use data published by the FASB to estimate the amount of sales returns related to the sales of simlar O C. Estimated Returns Inventory is an income statement account O D. It is acceptable to prepare a single adjusting entry which debits Estimated Returns Inventory and credits Refunds Payable

Explanation / Answer

Answer is option (A)

Because while recording sales return under perpetual inventory system we debit sales revenue and credit account receivable for reversing sales revenue and for reversing of cost pf merchandise sold we credit COGS and debit inventory account.These are reverse journal entries, therefore both sales revenue and cost of goods sold account are decreased.

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