What is recorded in the Purchase Return Journal?

The Purchase Return Journal is specifically designed to record transactions related to goods that have been returned to suppliers. This often happens when stock that was purchased on credit is found to be defective, incorrect, or simply unnecessary. When the buyer returns these goods, it is crucial to document the transaction accurately in the Purchase Return Journal to reflect a decrease in inventory and also recognize the reduction in liability toward the supplier.

Option C, therefore, is the correct answer as it correctly identifies the nature of the transactions that are documented in that specific journal. When stock is returned that was initially bought on credit, it involves both the physical movement of goods back to the supplier and the accounting adjustments to account for that return. This ensures that the company’s financial records remain accurate and up-to-date.

The other options relate to different types of transactions that would be recorded elsewhere. For instance, sales credit transactions are not relevant to purchase returns but pertain to sales made on credit. Cash payments made to suppliers are recorded in the cash payments journal rather than the purchase return journal. General ledger transactions encompass a wider range of entries that are not specific to the returns of purchased goods.