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The receivables’ ledger control account at 1 May had balances of $32,750 debit and $1,275 credit. During May sales of $125,000 were made on credit. Receipts from receivables amounted to $123,050. Refunds of $1,300 were made to customers. The closing credit balance is $2,000. What was the total of the debit balances outstanding at 31 May?
answer is $36,725
in the answer refund to credit customers is debited by 1300
but refund is actually decreasing recievables right,please kindly explain this.
what is journal entry for refund?A refundis a repayment of cash. It can be for several reasons – maybe the customer had paid us too much by accident and so we repaid the overpayment, or maybe the customer had bought some goods and paid for them but then returned them to us and so we gave the money back.
When we receive cash from customers we debit cash and credit receivables. If we repay some of the cash we credit cash and debit receivables.
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