Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Confused with the question
- This topic has 1 reply, 2 voices, and was last updated 3 months ago by John Moffat.
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- July 28, 2024 at 3:25 pm #708922
Peach Co returned faulty goods to a supplier and received a credit note from the supplier. When recording the credit note in the accounting system, Lime Co omitted to account for sales tax and, instead posted the gross amount of $1,296 to the returns outwards account. Both Peach Co and the supplier are registered to account for sales tax at the rate of 8%. What journal adjustment should Peach Co make to correct this error?
A Dr Sales tax $96, and Cr Cash at bank $300
B Dr Sales tax $96, and Cr Payables $250
C Dr Sales tax $96, and Cr Returns outwards $96
D Dr Sales tax $96, and Cr Purchases $250
Book Answer : C
I am not convinced with the answer in the book. The answer should be Dr Returns Outwards $96 and Cr Sales Tax $96 which is not in the option. Please kindly explain this sir. (The question is typed correctly.)July 28, 2024 at 4:40 pm #708928The correct answer is as you have written i.e. Dr Returns and Cr Sales tax.
Again, which book are you using?
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