Hugh Snow returned merchandise to Farley Co.The entry on Hugh Snow's books to record the return of merchandise to Farley Co.would include a:
A) Debit Accounts Payable
B) Credit to Purchase Returns and Allowances
C) Debit to Account Receivable
D) Debit Sales Returns and Allowances

Question

Quizplus · Accepted Answer

Whenever merchandise is returned to the supplier, the company needs to record a credit to Purchase Returns and Allowances account. This account is used to keep track of the returns of goods to the supplier. The company does not owe any money to the supplier for the returned merchandise, so there is no need to debit Accounts Payable or Account Receivable. Also, there is no need to debit Sales Returns and Allowances because the sales transaction has already been completed.

Hugh Snow Returned Merchandise to Farley Co