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How to Account for Purchases with Returns and Allowances

In this video, I will teach you what returns and allowances are, and how they affect your accounting records. We define returns and allowances as price reductions you receive from a supplier when you have defective or damaged merchandise. They reduce the amount of accounts payable that you owe to your supplier, and also the value of your merchandise inventory. I will show you how to record purchases with returns and allowances using a realistic example. You will learn how to make journal entries for purchasing merchandise, returning merchandise, receiving an allowance, and paying for merchandise with a discount. By watching this video, you will gain a better understanding of purchases with returns and allowances, and how they impact your financial statements. Jonathan M. Wild www.wildaccounting.com #accounting #accountingbasics #accountingstudent #merchandising #financialaccounting

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