Recording credit notes for purchases returns

Steps:

• Identify roles: Omar is supplier, Miriam is buyer who returned goods.
• Recognize credit note: Issued by supplier to buyer to acknowledge return and reduce amount owed.
• Determine Miriam's perspective: As buyer, she decreases liability to supplier and records return of purchases.
• Journal entry: Debit supplier's account (Omar) to reduce payable; credit purchases returns to adjust cost of goods.

Why C is correct:

• In buyer's books, credit note debits the supplier's account (Omar) and credits purchases returns, per double-entry accounting rules for reducing payables and purchase costs.

Why the others are wrong:

• A: Reverses entry by crediting Omar, which increases payable incorrectly.
• B: Includes sales returns, relevant only to seller's books, not buyer's.
• D: References sales returns and Miriam, confusing buyer with seller role.

Final answer: C