LO 7.3 You returned damaged goods to C.C. Rogers Inc. and received a credit memo for $250. Which journal(s) would the company use to record this transaction?Choose one answer from the options below.A. sales journal onlyB. purchases journal and the accounts payable subsidiary ledgerC. cash receipts journal and the accounts receivable subsidiary ledger D. cash disbursements journal and the accounts payable subsidiary ledgerE. general journal and the accounts payable subsidiary ledger
Question
LO 7.3 You returned damaged goods to C.C. Rogers Inc. and received a credit memo for $250. Which journal(s) would the company use to record this transaction?Choose one answer from the options below.A. sales journal onlyB. purchases journal and the accounts payable subsidiary ledgerC. cash receipts journal and the accounts receivable subsidiary ledger D. cash disbursements journal and the accounts payable subsidiary ledgerE. general journal and the accounts payable subsidiary ledger
Solution
The correct answer is D. cash disbursements journal and the accounts payable subsidiary ledger.
Here's why:
When you return damaged goods, the company (C.C. Rogers Inc.) would issue a credit memo. This means that they owe you money, or they have credited your account.
The cash disbursements journal is used to record all transactions where cash has been paid out (in this case, the company would be paying you back for the damaged goods).
The accounts payable subsidiary ledger is used to track money that the company owes. In this case, the company owes you money because of the returned goods, so this transaction would be recorded here.
So, the company would use both the cash disbursements journal and the accounts payable subsidiary ledger to record this transaction.
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