Which of the following journals is used when cash is refunded to a customer upon return of goods sold for cash?

A. Cash receipts journal
B. cash payments journal
C. sales returns and allowances journal
D. purchases returns and allowances journal

:eek: :confused: :eek:

I think its sales returns but it could possibly be cash payments 2.
Which one?? :confused: :mad: :confused:

C. Sales returns and allowances

Cash payments is for payments made to vendors not customers. Since the customer returned INVENTORY(goods you sold), then it would go in the sales returns and allowances journal.

Wait that can't be right! :/
How could I possibly use the sales returns journal when I sold the goods on cash??

Sales journal & sales returns is only associated with goods sold on credit!

Therefore the answer must be Cash payments journal! As the goods were sold on cash mind you

wait that can't be right!! :/
how could i possibly use the sales returns journal when i sold the goods on cash??????

Sales journal & sales returns is only associated with goods sold on credit!!

therefore the answer must be Cash payments journal!! as the goods were sold on cash mind you

Where do the goods go that were returned?

The answer is B, Cash Payments Journal.


Let's review the different types of journals:

Sales Journal: contains all transactions involving sales of merchandise on account.

Purchases Journal: contains all transactions involving purchases of merchandise on account.

Cash Receipts Journal: All money received into the business must be carefully controlled and deposited promptly.

Cash Payments (Disbursements) Journal: All money paid from the bank accounts must be carefully controlled and recorded in the cash payments journal

General Journal: Anything that does not fit into any other journal.


When the sale was made, the JE was
Dr. Cash
Cr. Sales

That would have been recorded in the Cash Receipts Journal

When the goods are returned, the JE is:
Dr. Sales Returns and Allowances
Cr. Cash

This will be recorded in the Cash Payments Journal

And on the Income Statement:
Sales
Less: Sales Returns and Allowances
Net Sales