Sales Returns or Returns
Inwards Journal:
Definition and Explanation:
Sales returns journal is a book in which
seller records all the sales that have been returned
to him by his customers. Sales returns journal is
also known as returns inwards book and sales returns
day book.
A
seller must expect in the course of business that
some of his customers will return goods for some
solid reasons (wrong color, wrong size, not
according to specification, imperfectly finished
etc.) When a debit note is received, along with the
goods returned from the buyer it is a claim on the
seller. If this claim is accepted by the seller then
he makes out a "credit note". in duplicate. It is
usually printed in red ink, signifying that the
customer's claim has been accepted and his account
has been given the required credit. The top copy is
sent to the buyer who has returned the goods. The
second copy is given to the clerk in the accounts
department, who enters it into the "sales returns
journal".
Suppose on
12.1.2005 S purchased 50 radio sets @ $1000 from I
electronics on credit. On receiving the goods, S finds
that 10 radio sets are of inferior quality. S returns,
these sets to the seller and sends him a debit note. On
receiving the debit note from S, the seller makes
out a credit note, in duplicate and sends the top
copy to the buyer (S). The second copy is sent to
the account department and is entered in the "sales
returns journal" The credit not is given below:
credit Note
Telephone.............
From: I Electronics, Washington |
No.........
Date......... |
To
: S |
We are crediting
your account with the value of under mentioned
sets received from you for the reason stated
as in your debit note. |
Date |
Particulars |
Details |
Amount $ |
15.1.05 |
10 radio sets @
$1000 as per debit note No. 37 dated 14.1.2005
No.... dated
12.1.05
Less trade
discount
Returned (goods
being of inferior quality) |
10,000
Nil |
10,000 |
E. & O.E
Signature |
This
credit
note is entered in the Sales returns journal in the
following way:
Purchases Returns Journal
Date |
Description |
Invoice |
L/F |
Details |
Amount |
15.1.2005 |
S
10 radio sets @ $1,000
Goods returned being of inferior quality |
-- |
CL.15 |
10,000 |
10,000 |
Example:
Enter the
following transactions in the sales returns or returns
inwards journal
and post them to the ledger accounts:
Feb.
3, 2005, Received back from Q Bros.
5 bundles of shirts @ $2,000 per bundle for inferior
quality. Less trade discount 10%.
Feb.
10, 2005, Mr A returned 10 bales of cloth @ $2,500
per bale for not according to order.
Feb.
27, 2005, Returned by M R 25 pairs of stock @ $20
per pair for wrong size. Less discount 10%
Solution:
Sales Returns Journal (Book)
Date |
Description |
Debit Note No. |
L/F |
Details $ |
Amount $ |
3.2.2005 |
Q Bros.
5 bundles of shirts @ $2,000 per bundle
Less trade discount 10%
(Goods being of inferior quality) |
----- |
CL.15 |
10,000
1000
--------- |
9000 |
10.2.2005 |
Mr. A
10 bales of cloth @ $2,500 per bale:
(Not according to order) |
----- |
CL. 19 |
25000 |
25000 |
27.2.2005 |
M. R
25 pairs of socks @ $20/pair
Less discount 10%
(Being goods not according to size) |
----- |
DL.25 |
500
50
------- |
450 |
29.2.2005 |
Sales returns
A/C Cr. |
|
GL. 30 |
|
34450 |
Ledger
Q
Bros. A/C (Folio 15)
|
Balance b/d |
$
40,000 |
3.2.2005 |
Sales Returns A/C |
$
9,000 |
Mr. A
A/C (Folio 19)
|
Balance b/d |
$
80,000 |
10.2.2005 |
Sales Returns A/C |
$
25000 |
Mr. R
A/C (Folio 25)
|
Balance b/d |
$
5,000 |
27.2.2005 |
Sales Returns A/C |
$
450 |
Sales Returns A/C (Folio 30)
29.2.2005 |
Sundry Creditors A/C
(Total returns for the month)
|
$
34,450 |
|
|
$
|
The balances are placed
on the debit side of Q Bros., Mr. Ali and Mr. R accounts
indicating that before return of the goods by them, they
were debtors of the business for $40,000, 80,000 and
5,000 respectively. After the return of the goods by
them, they became debtors of the became debtors of the
business for $31,000, 55,000, and 4,100 respectively.
The sales returns
journal is the last of the subsidiary books which
deals with the movement of goods into and out of a
business. But it should be remembered that only
credit transactions relating to purchases, sales and
returns of goods are recorded in these books.
Cash transactions
relating to purchases, sales and returns of goods in
a cash book. Transactions relating to purchases,
sales and returns of other items expecting goods i.
e. (machines, buildings, furniture etc.) are
recorded in journal proper.
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