Germany Journal entries - credit note

[TheresaRau]

Hi all, I'm a non-accounting student and have only one accounting exam (split in financial and internal). I'm an absolute beginner but have now learned how to do journal entries, prepare financial statements etc. I'm preparing for my exam next week and came across one journal entry that I don't really understand. It's related to a credit note. I hope you can help me.

The exercise is about activities of a shop and merchandise from a wholesaler is purchased several times (sometimes in cash, sometimes on accounts payable). Until 12.7. all outstanding invoices have been paid to the wholesaler. Here the transaction I have problems with:

On 12.7. defect merchandise valued at 7,000€ is returned to a wholesaler. The wholesaler writes a credit note.

Apparently debiting Accounts payable at 7,000€ and crediting Merchandise at 7,000€ is correct. (I have the correct solutions to compare mine with)
But I would have debited Accounts receivable at 7,000€ and credited Merchandise at 7,000€. My thinking here is, as the the shop receives a credit note from the wholesaler, that the wholesaler owes money to the shop. Or am I thinking completely wrong? I might not even understand the right meaning of a credit note..?

I would appreciate any help to my problem so much!! Thank you!

Theresa

 

[kirby]

You have a better solution than the given answer. Reason is since all payables have been paid, the AP account now holds a debit 7,000. A good accountant would reclass that to make it a debit 7,000 in AR.