The following question is on a take-home quiz. I am perplexed!

Could someone help and explain why one of the following answers is correct?


A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
1 Reflects an increase in amount due from a customer.
2 Recognizes that a customer returned merchandise and/or received an allowance.
3 Requires a debit memorandum to recognize the customer's return.
4 Is recorded when a customer takes a discount.
5 All of the above.

Thanks

CaptainForest

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

AR
Normally when someone owes us, we debit. So if we are crediting it, our AR balance is going down because either we are being paid (cash) or our writing off a delinquent account.

Sales Returns And Allowances.
When we debit it, we are increasing the account, which means people are returning goods they bought from us.

Therefore, the answer is:
2 Recognizes that a customer returned merchandise and/or received an allowance.