JOURNAL ENTRY FOR SALES RETURN (CASH,CREDIT,PART QUANTITY,WHOLE QUANTITY AND OTHER PRACTICAL SCENARIOS)

sales return
Journal entry for sale return:-

Hi friends, here we are going to learn journal entry for sale return.

Usually in accounting software we need to pass journal entry but before these we have to understand types of sales return 
1) Partly quantity returned 
2)whole quantity returned

PARTLY QUANTITY SALES RETURNED (Cash sales)

In this case if the Debtor found any damages in Stock which are in small quantities will be returned to vendor including taxes.

The journal entry will be :-                                                


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Sales return A/c      Dr
         To Cash  A/c
1000

1000
          
  (Narration:- Being Credit note raised against bill no:01)
  (* Dr:- Debit)
The rules for passing Journal entry
Debit
Here goods returned to us and the stock with us will increase. The debit to sales return decrease the sales account at the end of the accounting year. So,as per real account rule (Sales) "Debit what comes into business"
Credit
We need to pay cash to debtor for returning the goods
As per real account rule (Cash) “credit what goes out of business "(Current Assets)

PARTLY QUANTITY SALES RETURNED(Credit sales)

Here in this case if the Debtor found any damages in Stock which are in small quantities will be returned to vendor by raising a debit note(Credit note in case from seller side) including taxes.

The journal entry will be :-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Sales return  A/c      Dr
         To Sundry Debtor  A/c
1000

1000

(Narration:- Being Credit note raised vide bill no:01)

The rules for passing Journal entry
Debit
Here goods returned to us and the stock with us will increase. The debit to sales return decrease the sales account at the end of the accounting year. So, as per real account rule (Sales) "Debit what comes into business"
Credit
The amount owed by the debtor would have been sitting on debit side of the account. To cancel the amount due it is credited
As per personal account rule(vendor) "credit the giver account"(Current Assets)

WHOLE QUANTITY RETURNED

In this case, if the whole quantity is returned to debtor then we should ask the debtor to return the material by raising a sale invoice on us including the duties.

  The journal entry will be:-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Purchase A/c            Dr      
Duties & Taxes A/c   Dr        
                     To Debtor A/c                
1000
  200


1200

             
 (Narration: - Being purchase(Sales returned against bill no: 01)}
The rules for passing Journal entry
Debit
When there is need to return whole quantity the debtor will raise sale invoice instead of debit note on us. Here goods are coming into business.As per Real account rule (purchase) "Debit what comes into business"(Revenue account)
Debit
Duties and taxes paid will be treated as asset. We are receiving asset. As per Real account rule (Duties and taxes) "Debit what comes into business” (Current Assets)
Credit
The amount owed by the debtor would have been sitting on debit side of the account. To cancel the amount due is credited
As per personal account rule (vendor) "credit the giver account"(Current Assets)




REVERSAL ENTRY FOR WHOLE QUANTITY RETURNED

My Dear friends after passing above entry you need to pass adjustment entry to cancel the sales, because the entry which we have passed increases the purchase.so, the adjustment entry is:-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Sales A/c      Dr
         To Purchase  A/c
1200

1200
          
(Narration: - Being purchase (Sales returned against bill no: 01) was reversed}
The rules for passing Journal entry
Debit
Here instead of sales return we purchased the material which leads to increase in purchase. Actually it has to be decreased from sales. So, we are debiting sales to decrease it.
Credit


As we are increasing purchase for sales return has to be decreased by crediting the purchase account.


In our next topic we are going to learn how to pass journal entry for purchase in different scenarios. 

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