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Good afternoon sir, may I ask a question about double entry of CASH REFUNDS TO CREDIT CUSTOMERS. The answer from the text book showed that it should go to the debit side of receivables account, is it because that was the on the credit side of the cash account?
And would it be similar for payables ledger account as well?
Much appreciated for your help!
A cash refund is repayment of cash.
For example, suppose a customer paid an invoice twice by mistake. When we received the cash we debit cash and credit receivables and because they paid too much there will be a credit balance on their account.
When we refund the overpayment, we then credit cash and debit receivables.
I do explain this (with an example) in my free lectures on control accounts.
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
If you are watching the lectures then you do not really need the Study Text. The essential book (however you choose to study) is the Revision Kit. It is full of exam standard questions for practice, and practice is vital to passing the exam.
Thanks a lot sir. I just rewatched the lecture and there are just too many things easy to forget so sorry to ask the repeated question. And sorry to bother you with another question about phablets ledger. The question provided that a supplier’s account in the payable ledger with a debit balance of 800 has been included on the list of payables as a credit balance. But when it comes to calculate the closing balance in payables ledger account, it didn’t include this term. May I ask why is that the case? Many thanks for your explanation!
I cannot explain without seeing the complete question (if it is in the BPP Revision Kit then tell me the number of the question).