On March 18, James Smith purchased $5,000 of furniture from Home Furnishings on account. The cost of the goods was $3,000. On March 20, Home Furnishings granted the customer a $1,000 sales allowance for goods damaged in transit. Which of the following represents the correct way to record this transaction?

A) Sales Revenue 1,000
Cash 1,000
,
B) Refunds Payable 1,000
Cash 1,000

Merchanidse Inventory 600
Estimated Retuns Inventory 600

C) Refunds Payable 1,000
Accounts Receivable 1,000

D) Sales Returns and Allowances 1,000
Cash 1,000