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    aggie04's Avatar
    aggie04 Posts: 6, Reputation: 1
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    #1

    Sep 14, 2006, 03:12 AM
    Cash journals
    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:
    mh34's Avatar
    mh34 Posts: 20, Reputation: 1
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    #2

    Sep 14, 2006, 03:19 AM
    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.
    aggie04's Avatar
    aggie04 Posts: 6, Reputation: 1
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    #3

    Sep 14, 2006, 03:32 AM
    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
    mh34's Avatar
    mh34 Posts: 20, Reputation: 1
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    #4

    Sep 14, 2006, 03:49 AM
    Quote Originally Posted by aggie04
    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?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #5

    Sep 14, 2006, 06:31 PM
    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

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