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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 perpetual inventory method, what account is credited when adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period?

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

To determine

Identify the account that is credited if adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period under perpetual inventory method.

Explanation

Perpetual inventory system: The method or system of maintaining, recording, and adjusting the inventory perpetually throughout the year, is referred to as perpetual inventory system.

Justification for the incorrect options of (a), (c) and (d):

Merchandise inventory, customer refunds payable and sales returns and allowances accounts are not credited if adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period under perpetual inventory method. Therefore, all of these are incorrect answers...

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