On March 12, Klein Company sold merchandise in the amount of $8600 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4900. Klein uses the perpetual inventory system and the net method of accounting for sales. On March 15, Babson returns some of the merchandise, which is not defective. The selling price of the returned merchandise is $680 and the cost of the merchandise returned is $390. The entry(ies) that Klein must make on March 15 is (are):
A.
| Accounts receivable | 680? | |
| Sales returns and allowances | 680? |
B.
| Sales returns and allowances | 390? | |
| Accounts receivable | 390? |
C.
| Sales returns and allowances | 666? | |
| Accounts receivable | 666? | |
| Merchandise inventory | 382? | |
| Cost of goods sold | 382? |
D.
| Accounts receivable | 680? | |
| Sales returns and allowances | 680? | |
| Cost of Goods Sold | 390? | |
| Merchandise inventory | 390? |
E.
| Sales returns and allowances | 666? | |
| Accounts receivable | 666? | |
| Merchandise inventory | 390? | |
| Cost of goods sold | 390? |
Answer: E
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