JAMB Accounts Principles of Accounts 2010 Paper

Concept:Returned goods are restored to branch stock, while the customer's debt is cancelled.Explanation:When a branch customer returns goods, the branch receives the goods back.The customer owes less money, so the branch debtors account must decrease.In the head office books, branch debtors is an asset account, and a decrease is recorded by a credit entry.The returned goods increase the value of branch stock.Branch stock is also an asset account, and an increase is recorded by a debit entry.Therefore, the head office should debit branch stock account and credit branch debtors account.No cash account or goods sent to branch account is involved for this type of return.Answer:Option C: branch stock account and crediting branch debtors account.