How are purchase returns and purchase discounts recorded by a company using the periodic inventory system?

Question

Quizplus · Accepted Answer

Purchase returns and purchase discounts are recorded in contra-accounts to the Purchases account in the periodic inventory system. This is because the Purchases account represents the total cost of goods purchased during the period, and it needs to be reduced by returns or discounts to accurately reflect the net cost of goods purchased.

How Are Purchase Returns and Purchase Discounts Recorded by a Company