[fh09058]

I have a homework assignment and I really have tried to figure this one transaction out. I just need someone to tell me if I have the right accounts down that it has affected. It states that a guest came to a business. He got ill and had to leave. So a refund was given back in the amount of 1000. The accounts I have that it affected is Accts Payable DEBIT and Accounts Receivable Credited in the amount of 1000. Can you tell me if that's right or not?

[morgaine300]

First, don't ever use Accounts Payable and Accounts Receivable in the same entry.

Second, there is nothing in there implying that anyone owed anyone for anything. i.e. where is the payable/receivable coming from? Those accounts represent when you owe someone else or they owe you. Where does it state that anyone owed anything to involve these accounts? (Unless you are leaving out information, in which case we can't answer.)

Presumbly, since it doesn't say otherwise, the guest paid in cash, so you reverse that out. And whatever they paid to the company to begin with would have been revenue, which will also need reversed out. (I do not have a list of the accounts to be used to know if you have some type of contra revenue account to use.)

Any time you have a refund involved or you return an asset, or anything like that, generally speaking you are just going to reverse out the original entry you would have done.