X-Mart uses the perpetual inventory system to account for its merchandise. A customer who purchased merchandise

X-Mart uses the perpetual inventory system to account for its merchandise. A customer who
purchased merchandise on account requested an allowance on a merchandise purchase due to its
poor quality, but he did not return the goods back to X-Mart. Assuming that X-mart gives an allowance
of $50 on the merchandise, demonstrate the required journal entry on X-Mart's books to record the
allowance by selecting a// of the correct actions below. (Check all that apply.)

Debit Cost of Goods Sold $50.
Credit Merchandise Inventory $50.
Debit Merchandise Inventory $50.
Credit Cash $50.
Credit Sales Returns and Allowances $50.
Credit Cost of Goods Sold $50.
Debit Sales Returns and Allowances $50.
Credit Account Receivable $50.


ABC Mart received a $20 freight bill for merchandise it purchased with freight terms of FOB shipping
point. Assuming it paid the bill immediately, demonstrate the journal entry required to record the

freight charges, assuming the periodic inventory system is used.

Debit Transportation-In $20 and credit Merchandise Inventory $20.
Credit Transportation-In $20 and debit Cash $20.
Debit Transportation-In $20 and credit cash $20.
Debit Merchandise Inventory $20 and credit cash $20.