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Can you explain why allowances to customers on goods damages in transit are written on credit side of receivables control acoount (bpp study text 2019-2020, pg 254)? What is the double-entry for this transaction?
I do not have the BPP Study Text, only the Revision Kit.
If they give the customer an allowance for goods damaged they are reducing the amount that the customer will have to pay. So they will credit receivables (to reduce the balance).
They will debit an expense account. What they call the account is up to them but probably ‘damages in transit account’ 🙂 (Although obviously you cannot be asked to prepare t-accounts in the exam)
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