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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!
Purchase returns are like negative purchases, so yes – DR Payables and CR Purchases.
Hallo,
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!
I 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.
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