A customer returned merchandise purchased with cash with a sales price of $4,500. The cost of goods was $1,800. Which of the following represents the correct way to record this transaction? Select one: A. Sales Returns and Allowances 4,500 Cash 4,500Estimated Returns Inventory 1,800 Merchandise Inventory 1,800 B. Refunds Payable 4,500 Sales Revenue 4,500Merchandise Inventory 1,800 Estimated Returns Inventory 1,800 C. Refunds Payable 4,500 Cash 4,500Merchandise Inventory 1,800 Estimated Returns Inventory 1,800 D. Sales Revenue 4,500 Cash 4,500Merchandise Inventory 1,800 Cost of Goods Sold 1,800

D. Sales Revenue 4,500 Cash 4,500Merchandise Inventory 1,800 Cost of Goods Sold 1,800

Explanation:

The sale of inventory usually results in the posting of 4 entries, a pair of entries for revenue recognition and another pair for the recognition of the cost of the goods sold. these entries are

Debit Cash/Accounts receivable

Credit revenue

To recognize sales and ;

Debit cost of sales

Credit Inventory

To recognize the cost of the items sold.

When returns are made for items sold to a customer the reversing entries are posted into the reverse of what had earlier been posted.

88 because 4 plus 4 equals 8. 40 plus 40 equals 80. 80 plus 8 equals 88