A return of merchandise to the vendor results in a (A) debit to Purchases. (B) credit to Purchases Returns and Allowances. (C) credit to Purchases. (D) debit to Purchases Returns and Allowances. 1. 2. The purchase of supplies on account results in a (A) credit to Accounts Payable. (B) credit to Accounts Payable and the vendor's accounts payable account. (C) debit to Accounts Payable. (D) debit to Accounts Payable and the vendor's accounts payable account.

Question

Francisco Cantu

Business

25 July, 17:05

A return of merchandise to the vendor results in a (A) debit to Purchases. (B) credit to Purchases Returns and Allowances. (C) credit to Purchases. (D) debit to Purchases Returns and Allowances. 1. 2. The purchase of supplies on account results in a (A) credit to Accounts Payable. (B) credit to Accounts Payable and the vendor's accounts payable account. (C) debit to Accounts Payable. (D) debit to Accounts Payable and the vendor's accounts payable account.

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Rylie Mckee · Answer 1

A return of merchandise to the vendor results in a (B) credit to Purchases Returns and Allowances.

1. 2. The purchase of supplies on account results in a (A) credit to Accounts Payable.

Explanation:

A return of merchandise to the vendor results in a credit to Purchases Returns and Allowances.

Usually the double entry will be to:

Dr Account Payable or Account Receivable - to net off liability for the purchases now returned (Dr Account Payable) or to show that we are expecting refund for the return of merchandise (Dr Account Receivable)

AND

Cr Purchases Returns and Allowances or Inventory Account, to take account of the reduction in purchases and/or inventory.

1. 2. The purchase of supplies on account results in a (A) credit to Accounts Payable because when goods are purchased on credit we need to show that the amount for the goods are to be paid, so the credit goes to Account Payable rather than cash/bank