JournaldrillSales allowance without a return
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Cedar Lane Boutique sold $1,100 of merchandise on account. The customer reports that several items arrived with minor scuffs and agrees to keep them in exchange for a $180 reduction in the amount owed. Cedar Lane grants the allowance; no goods come back. Cedar Lane uses a perpetual inventory system.
What this exercise teaches
The price reduction is recorded in the contra-revenue account Sales Returns and Allowances, which keeps gross sales intact and shows the allowance separately. Accounts Receivable is credited because the customer now owes $180 less. Unlike a return, no goods come back, so Inventory and Cost of Goods Sold are not touched. Sales Discounts is for early-payment discounts, not for damaged goods.
A hint if you get stuck
An allowance reduces what the customer owes, and because nothing is returned there is no inventory to put back.
Try it now, free, no account needed
The first 15 tasks on Journaldrill are free. Open it on the practice page, solve it, and get instant feedback with a hint. A free account adds the worked solution; Pro adds timed mode and the certificate.
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