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The Complete Idiot's Guide® To Accounting by Lita Epstein, Shellie L. Moore

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Purchase Refunds and Allowances

As a customer, Lisa’s Candle Shop sometimes has reasons to return merchandise purchased for a refund or credit allowance. These transactions are relatively simple to record. Assume that $1,000 of the $8,000 in merchandise was returned before the invoice was paid. The invoice was recorded when the goods were received, so Lisa needs to adjust the amount to be paid. The transaction is recorded in this way.
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This entry reverses $1,000 of liability to the Accounts Payable account, and the credit is a positive number in the cost of goods sold section of the P&L statement that reduces the Purchases account. The accounts ...

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