Question

The entry to record returned merchandise to Vans Company is which of the following?

Answer 1

Debit Accounts Payable; credit Purchases

Answer 2

Answer:

The correct answer is:

Debit accounts payable, in the accounts payable subsidiary ledger, debit accounts payable in the general ledger, or credit purchases.

Explanation:

Returned merchandises are registered in the income statement. They reduce the revenues, the accounts receivable, and the accounts payable.  For example, we might find it suitable to register them in the debit accounts payable to make a cleaner paper instead of adding them in the credit purchases because they could mix with elements that are important there, like purchasing operations. So, we need to identify the place we want to register the returns, considering the knowledge of the people that could review the books to not make it hard for them.