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Question(s) / Instruction(s):

A customer returned merchandise that had been paid for within a discount period for credit. The entry was recorded with a debit to Sales Returns and Allowances and a credit to Accounts Receivable for the net amount. This error will cause:

A)           The net income for the period to be overstated.

B)            The net income is unaffected.

C)            The net income for the period to be understated.

D)           None of these are correct.

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