Answer:
The entry posting will be:
Dr Sales returns $40,000
Cr Trade Receivables $40,000
Explanation:
The reason is that when the products that Andrian Corporation delivered, the company recorded:
Dr Trade Receivables $100,000
Cr Sales $100,000
So the entry when the goods were returned must record decrease in the sales and trade receivable amount because the $40,000 worth of sales is not actually made and now after returning the goods worth of $40,000, the customer actually owes the company $60,0000. So the trade receivable must be reduced by $40,000 and sales return must be recorded with the same amount and a debit entry.
The entry will be:
Dr Sales returns $40,000
Cr Trade Receivables $40,000
