Holly Uses a Perpetual Inventory System

Multiple Choice

Holly uses a perpetual inventory system.Holly sells $3,500 of blue jeans.The customer later brings $420 of blue jeans back to Holly because they are defective.Those blue jeans had a cost of $140.The customer agrees to keep the blue jeans and Holly agrees to a $140 allowance.Which of the following is one of the entries that Holly will use to record the return?

A) Debit Cash for $140 and credit Inventory for $140.
B) Debit Inventory for $140 and credit Cash for $140.
C) Debit Cash for $140 and credit Sales Revenue for $140.
D) Debit Sales Revenue for $140 and credit Cash for $140.