- This topic has 5 replies, 3 voices, and was last updated 1 year ago by
.
- Posts
Dear Sir,
I do not quite understand this question:
A purchase return of $48 has been wrongly posted to the debit side of the sales returns account, but has been correctly entered in the supplier’s account.
The correct statement would be that the debit side of the trial balance to be $96 more than the credit side.
I am assuming that instead of posting the $48 to the debit side of purchase returns, it was posted to the debit side of sales returns, which would make the trial balance still balance. However, this concept seems wrong. May I know what is the correct explanation for this?
Purchase returns should be posted to the credit side of purchase returns (not the debit side).
When we buy goods we debit purchases (because it is an expense). When we return goods we should credit purchase returns (and debit payables because we owe less money).
Dear sir, I saw this question on Revision kit 2022/23, 17.12 as well.
My question is, why the answer is the debit side to be $96 more than the credit side. The question is asking: which statement would be correct, the wrong entry is Debit Sales return $48 only, hence it should create $48 more on debit side instead of $96, why the answer double up the amount? Did the question asking for correction entry or? Most of the times I don’t really get what is those questions asking for.
They debited an account when they should have credited an account.
So the debits are 48 more than they should be, and the credits are 48 less than they should be.
So in total the debits end up being 96 more then the credits.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Now I look back and I get it, thank you sir for your explanation. Are your lessons uploaded on Open tuition youtube channel?
- You must be logged in to reply to this topic.