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I am still confused that why we have the refund received from supplier then we have to eliminate payables, I understand why debit in cash account…but still not clear about in payable??
A refund from a supplier is simply repayment to us of cash that we had paid to a supplier.
Maybe, for example, we had paid the supplier too much by mistake – so the supplier repays us the extra. Maybe we had returned goods that we had already paid for – so the supplier repays the cash.
When we pay cash to a supplier, then we Cr Cash and Dr Payables.
If the supplier gives us back some of the cash, then the Dr Cash Cr Payables.
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