Unformatted text preview: far. DQ2 Amy is not being very ethical. Her actions are the same as if she were stealing. She purchases the merchandise because she wants it but she does not want to pay for it. If that company keeps track there returns from individuals she could no longer be allowed to shop at that company and they would no longer allow her to return items. I am not sure if she could face prosecution for her actions. Financially, the company would have to DR its sales returns and allowance for the purchase amount and CR accounts receivable. If the merchandise can be resold then they can DR merchandise inventory and CR cost of goods sold. If the merchandise is no longer able to be resold they would DR merchandise inventory for the value not the cost, DR loss from defective merchandise for the rest of the cost and CR cost of goods sold for the retail value....
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- Spring '10
- Want, Generally Accepted Accounting Principles, Cr Cost