Which account is debited when a customer returns merchandise bought on credit which account is credited?

Accounts Receivable account
When a customer returns something they paid for with credit, your Accounts Receivable account decreases. Reverse the original journal entry by crediting your Accounts Receivable account.

When a customer returns merchandise to the seller what account is debit?

When a credit customer returns merchandise to the seller, under a perpetual inventory system, the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold.

Is customer refunds payable a credit or debit?

When you issue a refund, you make a refund double entry, which means you must adjust two separate accounts in your records. First, record a debit to the “sales returns and allowances” account in a journal entry for the amount of the refund or allowance. A debit increases this account.

What transactions are entered if a customer returns merchandise purchased on account?

When merchandise is returned, the sales returns and allowances account is debited to reduce sales, and accounts receivable or cash is credited to refund cash or reduce what is owed by the customer. A second entry must also be made debiting inventory to put the returned items back.

What kind of accounts do you have when a customer returns merchandise?

Well, there are a few accounts you may be dealing with when a customer returns merchandise: 1 Sales returns and allowances 2 Cash 3 Accounts payable 4 Accounts receivable 5 Inventory 6 Cost of goods sold

How does a purchase return with store credit work?

Accounting for a purchase return with store credit is similar to a cash refund. But instead of entering in your Cash account, you credit your Accounts Payable account. Because you are not immediately paying the customer, you must increase the amount you owe through an Accounts Payable entry. This increases your liabilities.

What happens to your accounts receivable when a customer returns something?

When a customer returns something they paid for with credit, your Accounts Receivable account decreases. Reverse the original journal entry by crediting your Accounts Receivable account. Although you don’t lose physical cash, you lose the amount you were going to receive. One more thing … Inventory

What happens when a customer returns something to you?

When a customer buys something for you, you (should) record the transaction in your books by making a sales journal entry. So, when a customer returns something to you, you need to reverse these accounts through debits and credits. Debits increase some accounts and decrease others. The same is true for credits.