Say I purchsed $500 in Office Supplies on account, I return the office supplies, since I purchased them on account, the company I purchased them from will extend me a credit to my account decreasing the balance I owe them by the said amount. My books will record....
Account Payable (debit)
Office Supplies (credit)
I debit my Account Payable to show that I no longer owe that amount and I credit my Office Supplies to show that I no longer have that amount of supplies on hand.
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