The total of the returns outwards journal is posted to the
- Credit side of the returns outwards book
- Debit side of the returns outwards account
- Debit side of the purchases returns book
-
Credit side of the returns outwards account
The correct answer is: D
Explanation
When merchandise (goods) purchased for cash are returned to supplier, we need to record two journal entries. In first entry we debit accounts receivable account and credit purchases returns and allowances account. This entry is made to recognize the return of merchandise. In second entry we debit cash account and credit accounts receivable account. This entry is made when a refund is received from supplier for merchandise returned to him.