On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. 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 $600 and the cost of the merchandise returned is $350. The entry(ies) that Klein must make on March 15 is (are):

A.

Accounts receivable600 
Sales returns and allowances 600
Cost of Goods Sold350 
Merchandise inventory 350

B.
Sales returns and allowances588 
Accounts receivable 588
Merchandise inventory350 
Cost of goods sold 350

C.
Sales returns and allowances588 
Accounts receivable 588
Merchandise inventory343 
Cost of goods sold 343

D.
Sales returns and allowances350 
Accounts receivable 350

E.
Accounts receivable600 
Sales returns and allowances 600

Answer: B

Business

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