On Sep 18, Mesa returned $800 of the inventory. On Sep 20, Mesa paid Butte for the inventory. What journal entry did Mesa make on Sep 20

Decrease the trade payables by a debit entry with the amount paid after the return is made. Also decrease the assets of cash by creating a credit entry to depict outflow of economic benefits.

Explanation:

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Here i will explain the journal entries that are usually made when there is a Purchase, Return and Payment of Inventory assuming the view of the customer or trade receivable.

1. Purchase

Here we have to increase the value of inventory by creating a debit entry and also increase the value of trade payable by creating a credit entry.

2. Return

The value of trade payables has to be decreased to the extent of the amount that would have been paid if the inventory was not returned. Also the inventory value has to decrease with the same amount as for the trade payable.

3. Payment

Decrease the trade payables by a debit entry with the amount paid the after return is made. Also decrease the assets of cash by creating a credit entry to depict outflow of economic benefits.

answer/// real gdp decreases to y3 and the price level falls to p3;