I am a beginning accounting student and am having a difficult time with the fundamentals.?

Question

This question is from my accounting book. Could someone help with the correct answer and the explation of why the answer is correct?

Thanks


A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Reflects an increase in amount due from a customer.
Recognizes that a customer returned merchandise and/or received an allowance.
Requires a debit memorandum to recognize the customer's return.
Is recorded when a customer takes a discount.
All of the above.

Answer 1

Debit to sales returns and allowances is recognizing that the customer returned merchandise. This is being recorded as a contra-revenue, or as an account that reduces revenue.

Credit to accounts receivable reduces this asset. This is since the customer did not keep the merchandise and thus the firm no longer has a claim on receiving a future payment from the customer.

Thus the correct answer is B, recognizes that a customer returned merchandise and/or received an allowance.

A is not correct since we reduced (credit) the asset
C is not correct since the entry into the contra-revenue account memorializes the customer's return, no further entry is needed.
D is incorrect, the entry for a discount usually occurs at the time of the sale (with some exceptions), and usually uses a different account than the one mentioned
E is incorrect for intuitively obvious reasons.