Question

When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a 1 debit to Merchandise Inventory and a credit to Cash 2 debit to Cash and a credit to Merchandise Inventory 3 debit to Cash and a credit to Sales 4 debit to Sales and a credit to Accounts Payable

Answer 1

Option 2, When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a debit to Cash and a credit to Merchandise Inventory.

When goods are returned, the accounts receivable or cash account is credited to repay cash or lower what the buyer owes, and the sales returns and allowances account is debited to reduce sales. The accounts involved in the transaction are the purchases account and the cash account if goods are paid for in cash. It debits the purchases account and credits the cash account. The cash account and buyer sales account are the accounts involved in a transaction when goods are sold for cash. It debits the cash account and credits the sales account.

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