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Dear Mr Moffat,
Thanks very much for your extraordinary lecture support, it’s brilliant! I’ve passed my first two papers just by using the opentuition notes and watching your lectures. I’m currently preparing my F3 exams…
in regards to the chapter 16 example 1, receivable ledger control T account, the sales refund of 300$ was allocated on the debit side, I was wondering why is not on the Cr side, because to me, issue the refund is sort of like issue a discount credit for customer?
A refund is a repayment of cash. Maybe the customer paid us too much, so we repaid the cash.
When we pay cash back to them, we credit cash and debit receivables.
(Just suppose we invoiced the customer $100. We debit receivables with $100. Suppose they (by mistake) paid us $150. We credit receivables with $150.
They have paid us too much so we repay (refund) the extra. So we debt receivables with the $50, and so now there is no balance on the account, which is as it should be 🙂 )