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 discounts. b) Sales. c) Sales returns. d) Sales allowances.
Based on the information provided within the question it can be said that Gershwin would record this reduction by crediting accounts receivable and debiting sales allowances. This refers to a lower selling price when a product is defective but the consumer agrees to keep it instead of returning it. Which is what happened in this scenario after the company offered a 15% price reduction.
