A company receives a \$300 allowance for defective inventory but keeps the goods. How should this be recorded?

• A. Debit Inventory \$300; Credit Purchase Allowances \$300
• B. Debit Accounts Payable \$300; Credit Purchase Allowances \$300
• C. Debit Accounts Payable \$300; Credit Inventory \$300
• D. Debit Purchase Allowances \$300; Credit Accounts Payable \$300

Answer: (B)