J. Smith purchases merchandise from Hi-View Industries for $25,250 on account. Upon inspection of the merchandise received, J. Smith discovers damaged goods in the amount of $1,000 and requests to return the damaged merchandise to Hi-View Industries. What source document would Hi-View industries use for the journal entry to process this return?

Question

Quizplus · Accepted Answer

Hi-View Industries would use a Credit Memorandum as the source document to process the return of the damaged merchandise. A Credit Memorandum is used to document the return of goods to a supplier and serves as evidence of the supplier’s agreement to grant a credit to the buyer for merchandise returned. It documents a decrease in the amount owed to the supplier and would result in a credit to J. Smith's account.

J Smith Purchases Merchandise from Hi-View Industries for $25,250 on Account