Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › purchase returns
- This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
- AuthorPosts
- March 2, 2015 at 6:52 pm #231002
Hallo,
May I ask, I see that it is possible to have purchase returns as debits to A/P or as credits to Purchases, is this correct, if yes when do we use each, e.g. do we debit A/P when we talk of credit purchases and credit Purchases a/c when we talk about cash purchases, or there is no such thing, or we only use the A/P and we debit it, or there’s another reason to differentiate when to use what?
Thank you!
March 2, 2015 at 9:37 pm #231016Purchase returns are like negative purchases, so yes – DR Payables and CR Purchases.
March 3, 2015 at 10:39 am #231092Hallo,
But we can do either of the two, not the two at the same time, right, how do we know when to use which?
Thank you!
March 3, 2015 at 11:33 am #231098I don’t know what you mean by ‘either of the two’.
If we return goods to the supplier then we Dr Payables and Cr Purchases.
The effect is to reduce the amount owing to the supplier.
If we don’t owe anything to the supplier (because we have already paid for them) then we are left with a debit balance. If the supplier refunds the money to use the we Dr Cash and Cr Payables, but that is a separate issue. - AuthorPosts
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