Refund to customers — OpenTuition Forums

Zzihan6y ago

Hi sir, good day to you!!! I have a question regarding the example in the lecture: When we make adjustment in refunds to customers, we credit cash and debit receivables. But actually a debit to receivable means increase in receivables, which means the customer still owes us money, which is not true. So will we then credit receivables and debit sales to clear this? Thank you for your help sir!!

John MoffatTutor6y ago#1

We only make a refund (i.e. repay money) to customers if we owe them money. Maybe we sold goods for 100 (debit receivables 100), but maybe the customer accidentally paid us twice, so paid us 200 (debit cash, credit receivables 200). So there is a credit balance of 100 because we now owe the customer 100. So we refund the customer: Cr Cash Dr Receivables 100.

Zzihan6y ago#2

Oh..I get it. Thank you sir!!

John MoffatTutor6y ago#3

You are welcome :-)

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