Question

When recording a sales allowance where no merchandise is returned to the seller, the seller only needs to record one journal entry in a perpetual inventory system. True or False?

Answer 1

The seller needs to record two journal entries in a perpetual inventory system when recording a sales allowance where no merchandise is returned to the seller.

Step-by-step explanation:

The statement is False. When recording a sales allowance where no merchandise is returned to the seller, the seller needs to record two journal entries in a perpetual inventory system.

The first entry is to decrease the accounts receivable and sales revenue by the amount of the sales allowance. This is done by crediting the accounts receivable and sales revenue accounts.

The second entry is to decrease the cost of goods sold and inventory. This is done by crediting the cost of goods sold and debiting the inventory accounts. This reflects the reduction in the cost of goods sold due to the sales allowance.