26 September 2011
When goods bought / sold on cash are returned by the business / to the business, the concerned journal entries are:
(Returned by the business) Cash A/C Dr. To Purchases A/C
(Returned to the business) Sales A/C Dr. To Cash A/C
When goods bought / sold on credit are returned by the business / to the business, the concerned journal entries are:
(Returned by the business) Supplier A/C Dr. To Purchase Returns A/C or Returns Outward A/C
(Returned to the business) Sales Returns A/C or Returns Outwards A/C Dr. To Customer A/C
Question: Why in the 2nd case (return of goods purchased / sold on credit) do we use Purchase Returns A/C (or Returns Outwards A/C) / Sales Returns A/C (or Returns Inwards A/C) in place of Purchases A/C / Sales A/C?
26 September 2011
In my opinion in case of cash also you can use Purchase/ Sales return, the impact in both the cases are same as Purchase / Sales return are gonna deducted from the concerned purchase / SAles account, The impact in both the cases will be the same
CAclubindia
