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Basic bookkeeping- exam kit question

This topic has 1 reply, 2 voices, and was last updated 8 years ago by Ken Garrett.

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March 13, 2016 at 6:45 am #306123
Gwen Henry
Member
- Topics: 12
- Replies: 19
Which of the following is the correct journal entry to record a credit note issued to a customer for goods returned?
Ans. Dr. Sales returns
Cr. Cash
Initially I circled
Dr. Sales returns
Cr. Trade Receivables
But then I came to know that the answer is the first one. Is it because it says “issued” in the question or is the answer wrong?
March 13, 2016 at 8:50 am #306143
Ken Garrett
Keymaster
- Topics: 10
- Replies: 10533
Either could be right. It depends on whether the customer was a cash customer who would be given cash, or a credit customer who would have his/her account credited.
Even cash-based businesses issue invoices and credit notes to document sales and returns.
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