Question

Global Company sold merchandise to Montana Industries for cash, $3,450. The cost of merchandise sold was $1,850. Global Company refunded Montana Industries $900 for returned merchandise. Which of the following will be recorded by Montana Industries in the journal entry for the refund from the return?

Answer 1

Answer:

Db Accounts Payable or Cash____900

Cr  Inventory account__________________900

Explanation:

The journal entry would be: If merchandise is returned to a supplier, a debit is made to Accounts Payable or Cash, and a credit is made to the Inventory account.