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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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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 debited when an estimate is made for the cost of merchandise inventory sold this year, but expected to be returned next year?

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

To determine

Identify the account that is debited if an estimate is made for the cost of merchandise inventory sold 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 (b), (c) and (d):

Sales returns and allowances, merchandise inventory and customer refunds payable accounts are not debited if an estimate is made for the cost of merchandise inventory sold this year but expected to be returned next year, under periodic inventory system. Therefore, these are incorrect options...

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