7.3 Returns - Contra Accounts

Question 1

Purchase returns

Answer 1

Debit cash and credit purchase returns and allowances (contra expense)

Question 2

Sales returns

Answer 2

Debit sales returns and allowances (contra revenue) and credit cash

Question 3

Net purchases formula

Answer 3

Purchases
Less: Purchase Returns and Allowances

Question 4

Periodic Calculation new formula

Answer 4

COGS = Beg Inventory + Net Purchases + Freight-In - Ending Inventory