Salvage value on damaged inventory
I have a situation where inventory purchased on account was returned damaged. The original value of sale was $60. I am told the salvage value of the inventory is $20 and to record the inventory at its salvage value.
1st possible way to journalize?:
Sales Returns & Allowance debit $60
AR - Customer acct credit $60
Inventory debit $20
COGS credit $20
But I am wondering if:
Sales Ret & Allow should be debit $20 (salvage amount)
AR stays the same at $60
Inventory stays the same at $20
COGS should be credit $60
Any help on this would be appreciated. I kind of think the 1st journal entries are correct but I started thinking about the value of the COGS & whether it should be salvaged like Inventory or the original $60