[Solved] A Sales Returns And Allowances Account Is Not Debited If A Customer:

The correct answer of this MCQ is (c), as utilization of a prompt payment incentive from seller to buyer gives him a Sales Discount, so he bought goods / merchandise at a discounted price and the seller sold goods at Discount to encourage buyer to buy and hence increased the Sales of his business for the accounting period. So, in this case, Sales Returns and Sales Allowances are not created and hence not debited in the journal entry while Sales Discount is debited which lowers the cost of goods or merchandise i.e., sales discount is a Contra Revenue Account which is deducted from Gross Sales on Income Statement.