Customer returns merchandise bought on account (periodic inventory)

Transaction

Last week a store sold merchandise on account for $4,000.00. Today the customer returns part of the merchandise, with a sales price of $600.00, because it does not match the order, and the store issues a credit memo. The customer has not paid yet.

Assumptions: The store uses the periodic inventory system, so the return of the goods to stock is not recorded in Inventory. Returns are recorded in Sales Returns and Allowances, not by debiting Sales Revenue. No sales tax applies.