[shattrd]

..

[morgaine300]

Pay attention to the direction everything is going. Are you Wal-Mart? If Wal-Mart returns it, did you sell it to them, or did you buy it from them? Accounts Payable represents what you owe to someone else. If Wal-Mart is returning it, you never owed them anything to begin with. They owed you. You have to stop being an individual consumer and start being a company.

Essentially a return from a sale is mostly flipping around the original entries that were made on the sale. You have two entries that were made, and you also have two entries to flip around. (i.e. debit what you credited, and credit what you debited. You're un-doing those entries.) The only exception is that you don't take it directly out of sales, but use the contra account Sales Returns & Allowances.

Also, if they returned it, they don't owe $5000 anymore. The concept of the payment entry is correct, but the dollar amounts are not because it's not accounting for that return. I think what you're not getting here is that your company did not make the return -- it got returned to your company and you're giving them credit for the return.

With that info, try again and see how you do.

[shattrd]

Thanks, that helped a lot.