t) A customer returned merchandise purchased with cash with a sales price of $4,

Question

t) A customer returned merchandise purchased with cash with a sales price of $4,500. The cost of goods was $1,800. Which of the following represents the correct way to record this D) 4500 A) Cost of Goods sold is a contra revenue account B) Cost of Goods Sold is based on the company's cost, not the retail price C) In a perpetual inventory system, the Cost of Goods Sold account is continually updated D) Cost of Goods Sold represents the cost of inventory that has been sold to customers income statement? A) selling expense C) cost of goods sold B) sales discounts D) all of the above

Explanation / Answer

Answer to 1. The correct entry is -

Sales Revenue A/C ...... Dr. 4,500

To Cash 4,500

Mechandise Inventory A/C ..... Dr. 1,800

To Cost of Goods Sold 1,800

Answer to 2

Cost of Goods Sold is a Contra Revenue account is an incorrect statement

Answer to 3

Cost of goods sold is deducted from Net sales revenue to arrive at gross profit

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