Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting Accounts Receivable and debiting:a. Sales Revenue.

b. Sales Discounts.

c. Sales Returns.

d. Sales Allowances.

The answer is D.

Explanation:

A sales allowance is a reduction in the price of goods or services that have been sold to a customer because of a defective or abnormality with good or service (for example in the question, wrong shade of painting).

Sales allowance is usually created after the price has been charged to the customer but before the customer pays.

Sales allowance is similar to sales discount just that sales discount is done to encourage sales.