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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Under the periodic inventory system, what account is credited when an estimate is made for sales made this year, but expected to be returned next year?

  1. (a) Merchandise Inventory
  2. (b) Customer Refunds Payable
  3. (c) Sales
  4. (d) Sales Returns and Allowances

To determine

Identify the account that is credited if an estimate is made for sales this year, but expected to be returned next year, under periodic inventory system.

Explanation

Periodic inventory system:

The method or system of recording the transactions related to inventory occasionally or periodically are referred to as periodic inventory system.

Justification for the incorrect options:

Options of (a), (c) and (d):

Merchandise inventory, sales and sales returns and allowances are not credited if an estimate is made for sales this year, but expected to be returned next year, under periodic inventory system. Therefore, these are incorrect options...

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