Question

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction 18) Gershwin would record this reduction by crediting Accounts Receivable and debiting A) Sales Discounts B) Sales Revenue C) Sales Returns D) Sales Allowances

Answer 1

Answer:

D) Sales Allowances

Explanation:

The journal entry to record the reduction is shown below:

Sales allowance A/c Dr XXXXX

            To Account receivable A/c XXXXX

(Being the reduction is recorded)          

While recording the reduction, we debited the sales allowance and credited the account receivable so that the proper posting could be done