quick accounting question (1 Viewer)

[s.m.i.t.h]

this is from week 10 tutorial homework p 6.5
when you receive a cash refund for returning damaged goods and NOT a credit note
what do u dr and cr??

u dr cash....and cr...?? its not inventory cos the trial balance doesnt work out

 

[fush]

mmmm well it depends
if you had originally paid the goods on credit then

dr accounts payable
cr purchases returns and allowances
(reducing a liability to pay for the damaged goods)

or if originally paid in cash

dr cash
cr Purchaes Returns and Allownaces

it also depends if you use a periodic or perpetual inventory system, if using a periodic system, then use above method, if using perpetual then repalce the
cr Purchaes Returns and Allowances with a Cr Inventory