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Sir can you explain me the answer of senji that is question number 20.10. I was a bit confused about refunds from supplier transaction, it was on the credit side of T account and there was a drawing of goods for personal goods why was that in credit.
I think refunds will reduce trade payables so shouldn’t it be in debit side of T account.
Please explain the treatment of these two transactions??
The t-account in the answer should really have been headed up a ‘payables control account’, but otherwise it is correct.
Refund are simply repayments of cash (maybe, for example, we had paid too much by mistake). When we pay cash the we credit cash and debit payables. If they refund some of the cash then we debit cash and credit payables.
If goods are taken from inventory then we charge the owner by debiting drawings and credit payables.
Have you watched my free lectures on control accounts?
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