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Home Special Journal Sales Returns or Returns Inwards Journal
 
 

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.

Relevant Articles:

What is Subdivision of journal
Purchases Journal
Sales Journal
Purchases Returns Journal
Sales Returns Journal
Special Journal Quiz

 

 

A D V E R T I S E M E N T

 

Financial Accounting Topics


  Introduction to Accounting
 ----------------------------------------------------------------------------
  Transactions and Accounting Equation
----------------------------------------------------------------------------
  Analysis of Business Transactions
----------------------------------------------------------------------------
  Journal, Ledger and Trial Balance
----------------------------------------------------------------------------
  Accounting for Bills of Exchange
----------------------------------------------------------------------------
  Special Journals
----------------------------------------------------------------------------
  Cash Book
----------------------------------------------------------------------------
Bank Reconciliation Statement
----------------------------------------------------------------------------
  Final Accounts
----------------------------------------------------------------------------
  Work Sheet
----------------------------------------------------------------------------
  Capital and Revenue Items
----------------------------------------------------------------------------
  Valuation of Inventories
----------------------------------------------------------------------------
  Accounts of Non-profit Making Organizations
----------------------------------------------------------------------------
  Statement of Cash Flows
----------------------------------------------------------------------------
  Accounting Ratios Analysis
----------------------------------------------------------------------------
  Depreciation, Provisions and Reserves
----------------------------------------------------------------------------
  Accounting Dictionary
----------------------------------------------------------------------------
  Financial Calculators
 
 
 
Managerial Accounting Topics

  Financial Statements
----------------------------------------------------------------------------
  Cost Volume Profit Relationship
----------------------------------------------------------------------------
  Variable Costing System
----------------------------------------------------------------------------
  Materials and Inventory Cost Control
----------------------------------------------------------------------------
  Activity Based Costing System
----------------------------------------------------------------------------
  Standard Costing and Variance Analysis
----------------------------------------------------------------------------
  Balanced Scorecard
----------------------------------------------------------------------------
  Capital Investment Analysis/Capital Budgeting
 

 

 

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