Recording Purchases Returns in Double-Entry Bookkeeping

Steps:

• Identify the transaction as a purchases return on credit, reducing the liability to the supplier.
• Debit the supplier's account to decrease the payable (personal account in purchases ledger).
• Credit the purchases returns account to record the reduction in purchases (impersonal account in general ledger).
• Ensure both entries balance the double-entry system.

Why C is correct:

• In double-entry bookkeeping, purchases returns require a debit to the supplier's account (purchases ledger) and a credit to the purchases returns account (general ledger), as per the matching principle for adjusting liabilities and expenses.

Why the others are wrong:

• A: Cash book is irrelevant without cash movement; sales ledger tracks receivables, not payables.
• B: General ledger alone omits the personal account adjustment in the purchases ledger.
• D: Purchases ledger alone misses the nominal account entry in the general ledger for complete double-entry.

Final answer: C