17. xlcorp sold $5,000 of goods on credit to one of its customers. a few days later, xlcorp issued a $200…

17. xlcorp sold $5,000 of goods on credit to one of its customers. a few days later, xlcorp issued a $200 credit memo to the customer for some tarnished products. which account should xlcorp debit when processing the credit memo? select... sales accounts receivable purchase discounts sales allowances

17. xlcorp sold $5,000 of goods on credit to one of its customers. a few days later, xlcorp issued a $200 credit memo to the customer for some tarnished products. which account should xlcorp debit when processing the credit memo? select... sales accounts receivable purchase discounts sales allowances

Answer

Brief Explanations:

A credit memo for tarnished products is a reduction in the amount the customer owes due to a product - related issue. Sales Allowances is used to record such reductions in sales revenue related to defective or unacceptable goods. When processing the credit memo, Sales Allowances is debited. Accounts Receivable is credited to reduce the amount the customer owes. Sales is not directly debited as it is a contra - revenue account (Sales Allowances) that is used instead. Purchase Discounts is related to discounts on purchases made by the company itself, not applicable here.

Answer:

Sales Allowances