BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s account payable to the vendor, is called a purchases allowance.

Detailed explanation-2: -When merchandise that was sold is returned, a credit to sales returns and allowances is made. Customer Refunds Payable is an account used to record merchandise returns from customers.

Detailed explanation-3: -In accounting, refunds are handled through a contra-revenue account known as the sales returns and allowances account, reports Accounting Coach. When you issue a refund, you make a refund double entry, which means you must adjust two separate accounts in your records.

Detailed explanation-4: -When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit.

Detailed explanation-5: -When a company pays part or all of a previously recorded vendor invoice, the balance in Accounts Payable will be reduced with a debit entry and Cash will be reduced with a credit entry. Accounts Payable is also debited when a company returns goods to a vendor or when the vendor grants an allowance.