On September 12, Ryan Company sold merchandise in the amount of $5,800 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ryan uses the periodic inventory system and the net method of accounting for sales. On September 14, Johnson returns some of the non-defective merchandise, which is restored to inventory. The selling price of the returned merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Ryan must make on September 14 is (are):
A.
| Sales returns and allowances | 500 | |
| Accounts receivable | 500 |
B.
| Sales returns and allowances | 350 | |
| Accounts receivable | 350 |
C.
| Sales returns and allowances | 490 | |
| Accounts receivable | 490 | |
| Merchandise inventory | 343 | |
| Cost of goods sold | 343 |
D.
| Sales returns and allowances | 490 | |
| Accounts receivable | 490 |
E.
| Sales returns and allowances | 490 | |
| Accounts receivable | 490 | |
| Merchandise inventory | 350 | |
| Cost of goods sold | 350 |
Answer: D
Business
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