Lite Company records purchases at invoice price, using the periodic inventory system. On July 5, Lite returned $18,000 of goods purchased on account to the seller.
How would Lite record this transfer?
A) Accounts Payable 18,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Purchases Returns and Allowances 18,000
B) Accounts Receivable 18,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Purchases Returns and Allowances 18,000
C) Accounts Payable 18,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Purchases 18,000
D) Cash 18,000
$\quad $ $\quad $ $\quad $ $\quad $ Purchases Returns and Allowances 18,000

Question

Quizplus · Accepted Answer

When goods are returned to a supplier, the company decreases its Accounts Payable (since it now owes less to the supplier) and records the return in the Purchases Returns and Allowances account, reflecting a reduction in the cost of purchases.

Lite Company Records Purchases at Invoice Price, Using the Periodic \quad

Lite Company Records Purchases at Invoice Price, Using the Periodic $\quad$