To record a return of merchandise purchased on credit on the books of the buyer, the accountant would:
A)debit Purchases and credit Purchases Returns and Allowances.
B)debit Purchases Returns and Allowances and credit Accounts Receivable.
C)debit Purchases Returns and Allowances and credit Purchases.
D)debit Accounts Payable and credit Purchases Returns and Allowances.

Question

Quizplus · Accepted Answer

When a buyer returns merchandise that was purchased on credit, the accountant should debit Accounts Payable to decrease the liability (since the buyer owes less to the seller after the return) and credit Purchases Returns and Allowances to record the return of the merchandise. This entry reflects the reduction in the cost of purchases and the amount owed to the supplier.

To Record a Return of Merchandise Purchased on Credit on the Books