A firm uses the periodic inventory method.Which of the following entries would be made to record a return of $220 of inventory purchased on credit,including GST?
A)The accounting entry would be a $200 debit to Accounts payable and a $200 credit to Purchases.
B)The accounting entry would be a $220 debit to Purchases and a $220 credit to Accounts payable.
C)The accounting entry would be a $200 debit to Purchase returns and allowances,a $20 debit to GST clearing and a $220 credit to Accounts payable.
D)The accounting entry would be a $220 debit to Accounts payable a $200 credit to Purchase returns and allowances,and a $20 credit to GST clearing.

Question

Quizplus · Accepted Answer

In a periodic inventory system, returns are recorded by debiting Accounts Payable for the total amount, and crediting Purchase Returns and Allowances for the net amount and GST Clearing for the GST portion.

A Firm Uses the Periodic Inventory Method