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Double entry bookkeeping

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Double entry bookkeeping

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 16, 2021 at 6:00 pm #610654
    Mohapy
    Participant
    • Topics: 11
    • Replies: 3
    • ☆

    Smith Co has the following transactions:
    1 Purchase of goods on credit from T Rader : $450
    2 Return of goods purchased on credit last month to T Rouble: $700

    What are correct ledger entries to record these transactions?

    The answer given of which I do not follow is given as follows

    Dr purchases $450
    Dr trade payables $250
    Cr purchases returns $ 700

    I do not understand why trade payables are debited with $250. I am asking for clarification on that .

    February 16, 2021 at 6:37 pm #610664
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    There are two separate transactions.

    The entry for the purchase from T Rader is:
    Debit purchases 450 and Credit payables 450

    The entry from the returns from T Rouble is:
    Debit payables 700 and Credit returns 700

    Putting the two together means a net entry to payables of a debit of 700 – 450 = 250.

    February 16, 2021 at 7:19 pm #610667
    Mohapy
    Participant
    • Topics: 11
    • Replies: 3
    • ☆

    Oh, now I see where I went wrong.Thank you very much.

    February 17, 2021 at 8:04 am #610702
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Double entry bookkeeping’ is closed to new replies.

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