Returned merchandise under the periodic inventory method. This will be recorded with:
A) a debit to Accounts Payable and a credit to Purchases Returns and Allowances.
B) a debit to Merchandise Inventory and a credit to Cash.
C) a credit to Accounts Payable and a debit to Merchandise Inventory.
D) a debit to Accounts Payable and a credit to Merchandise Inventory.

Question

Quizplus · Accepted Answer

Under the periodic inventory method, returns of merchandise purchased on account are recorded by debiting Accounts Payable (to reduce the liability) and crediting Purchases Returns and Allowances (to reduce the cost of purchases).

Returned Merchandise Under the Periodic Inventory Method