If goods worth $10,000 were sold and $6,000 were on account, what would you debit or credit to record the return of $6,000 in goods?

To understand the correct treatment of the return of $6,000 in goods, consider the nature of the transaction. When goods are returned, the company is essentially reversing a part of the previous sale.

In this case, since $6,000 of the goods were sold on account, the return impacts the accounts receivable which represents money that customers owe to the company. The accounting entry for the return of goods would involve reducing the amount in accounts receivable to reflect that the customer no longer owes that amount.

By crediting accounts receivable for $6,000, the company accurately reduces the outstanding balance owed. This adjustment aligns with the double-entry accounting system where every transaction affects two accounts. The return decreases assets (accounts receivable) because the company will not receive that amount anymore.

Debiting accounts receivable would inaccurately imply an increase in what the customer owes, while crediting sales returns and allowances for the entire $10,000 would not accurately reflect the return of only $6,000 worth of goods. Therefore, crediting accounts receivable for $6,000 correctly records the impact of the return on the company's financial statements.