Double entry booking

Hi John

What is the correct double entry for a cash refund to the customer?

1. DR Bank / CR receivable
2 DR Receivable / CR Bank
3. DR Receivable / CR Refunds given
4. DR Refund given / CR Bank

My answer is 2 for the below reasons

We need to refund Credit note issued to the customer, so in this case Receivable is open on CR side so to offset we need to DR receivable
We need to refund for amount received for customer but not due.

The book says that the correct answer is 4 because we need to reduce the sale with the expensive refund give.

However, my question is: where does the question say that the sale was done by cash and not by credit?

I would agree with the asnwer 4 if it was specified that the sale was on cash.

The only concern that I have is that by saying “cash refund” the question means that the sale were made on cash, but it does not make sense to me as as far as I know with can refund the customer with sale were made on credit with cash as wel.

I would like to ask you to confirm if you agree with my point so avoid any confusion

Thanks a lot

Gabbi