Why did we debit and credit this?
Bought goods on credit from B.Hind £1,455
I understand why we debited the purchased because it is increased. But why are we crediting B.Hind?
We returned goods to B.Hind £82.
What happens here?
Sold goods on credit to P. Syme.
I'm guessing we credit the sales since it's decreasing, so why do we debit P.Syme then? Or?
- olliverLv 63 years agoFavorite Answer
CR: Accounts payable (B Hind)
The business has a liability to B Hinds to pay for the goods/services supplied. The credit shows the liability.
When goods are returned
DR: Accounts payable
CR: Purchase returns
DR: Accounts receivable (P Syme)
Sales account increases (credit), and money is owed to the business by P Syme, shown as accounts receivable asset.
- BillybeanLv 73 years ago
It's simple double entry bookkeeping and I assume that this is part of your coursework/homework.
You should have listened in class.
Here's a quick rundown to guide you:
1. Debit Purchases, credit Trade Creditor.
2. Credit Purchases, debit Trade Creditor.
3 Credit Sales, debit Trade Debtor.