Question

Stear Corp. purchases goods on credit for $2,000. It records this transaction in the journal. It then returns a quarter of these goods to the vendor because they were defective. How will the accountant record the transaction of returning the defective goods in the journal?

A.
Accounts Receivable Account (debit) 2,000 Purchase Return Account (credit) 2,000
B.
Purchase Return Account (debit) 2,000 Accounts Receivable Account (credit) 2,000
C.
Accounts Payable Account (debit) 2,000 Purchase Return Account (credit) 2,000
D.
Purchase Return Account (debit) 2,000 Accounts Payable Account (credit) 2,000

Answer 1

Answer:

The correct answer is C

Explanation:

The journal entry for the goods which were defective returned to the vendor:

Accounts Payable A/c................Dr   $2,000

     Purchase return A/c..................Cr  $2,000

Because when the purchase have been made, the entry is passed:

Purchase A/c............................Dr    $2,000

     To Accounts Payable A/c......Cr    $2,000

So, when the goods were returned the accounts payable account will be offset by debiting the account because earlier it was credited and the account of the purchase return will be credited.