On July 1, Ferguson Company, Inc. sold merchandise in the amount of $5,800 to Tracey Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ferguson uses the perpetual inventory system. On July 5, Tracey returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Ferguson must make on July 5 is:
a. Sales returns and allowances - 500 Accounts receivable - 500Merchandise inventory - 350 Cost of goods sold - 350
b. Sales returns and allowances - 500 Accounts receivable - 500
c. Accounts receivable - 500 Sales returns and allowances - 500
d. Accounts receivable - 500 Sales returns and allowances - 500Cost of goods sold - 350 Merchandise inventory - 350
e. Sales returns and allowances - 350 Accounts receivable - 350
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