How shall we understand the concept "refunds received from suppliers"? I don't quite understand why it's placed on the credit side of a payables ledger control a/c? because it seems to me that money received from the supplier should reduce the amount payable, which means it should be on the debit side.
Any help will be highly appreciated.
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FA "refunds received from suppliers"
But before the refund is received, you must've returned goods to the supplier. So the amount of the returned goods would be on the debit side of the control account and when the supplier actually pays the money back by way of refund, it is basically the other side of the transaction (credit) to net them both to zero.
Dear Fidget,
when we return goods to supplier (bought on credit) it should be Cr. Purchases & Dr. Payables.
but when there's refund from Supplier. it's Dr. Cash & Cr. Payables.
But what's the use of such operation?
Thank you.
wow thank you fidget ,, i got your logic ,, thanks a lot
What was refunded? Let me see the entire question
10y ago#6I really do suggest that you watch the free lectures on control accounts!!
Refunds are simply a repayment of cash.
Maybe the customer had paid us too much by mistake - so we repay/refund the overpayment.
Maybe the customer returned goods for which they had already paid - so we repay/refund the money.
(Same logic applies to refunds to us from suppliers)
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