Question

Bud Company records purchases at invoice price, using the periodic inventory system. On July 5, Bud returned $12,000 of goods purchased on account to the seller. How would Bud record this transfer? ? Accounts Payable OA. Purchases Returns and Allowances 12.000 12,000 12,000 Accounts Payable OB. Purchases B. Purch 12,000 12,000 Accounts Receivable OC. Purchases Returns and Allowances 12,000 Cash 12,000 OD Purchases Returns and Allowances 12,000Accounts Payable A. Purchases Returns and Allowances 12.000 12,000 12,000 B. Purchases B. Purch 12,000 12,000 Accounts Receivable C. Purchases Returns and Allowances 12,000 Cash 12,000 D Purchases Returns and Allowances 12,000

Answer 1

Answer:

The journal entry for recording the transaction of transfer is shown below:

Explanation:

The journal entry for recording the transaction of transfer is as  follows:

Accounts Payable A/c..............................................Dr $12,000

     Purchases Returns and Allowances A/c..................Cr  $12,000

Being record the transfer of goods which were purchased earlier

When the purchase was made, this would be passed or recorded as:

Purchase A/c.................................................Dr   XXXX

      Accounts Payable A/c..............................Cr  XXXX

Being purchase recorded

So, when some of the purchase is returned, then the accounts payable account is debited against the account of Purchases Returns and Allowances with the amount of purchase return.