Credit Notes for Sales Returns Posting

Steps:

• Identify credit notes issued by Alex as returns from customers, recorded in sales returns day book.
• Total the sales returns day book at month-end.
• Post the total to nominal ledger by debiting sales returns account to increase returns and reduce net sales.
• Credit the debtors control account for the amount owed reduction.

Why D is correct:

• Per double-entry bookkeeping, sales returns are debited to the sales returns account to reflect increased returns, decreasing gross sales per the accounting equation.

Why the others are wrong:

• A: Purchases returns relate to supplier returns, not customer credit notes; credited posting is incorrect for returns outward.
• B: Purchases returns account is for returns to suppliers, not applicable to issued credit notes.
• C: Identical to D, but assuming phrasing error; if credited, it wrongly decreases returns instead of increasing them.

Final answer: D