Debit to sail returns and allowance and a credit to account receivable is the answer.
When a seller sells goods to a customer, the journal entry should include a debit to accounts receivable because accounts receivable is a current asset recoverable in a future date and a credit to sales revenue because the sale is an income to the seller. Subsequently, when the buyer returned merchandise to the seller, accounts receivable shall be credited to the extent of the sale value of goods returned because it was debited at the time of recording the original sale transaction (as explained above).
As sales is an income account, it cannot be debited at any cost and so one contra sales account named 'Sales returns and allowances' shall be debited for recording goods returned by a customer.
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