Results are out! Find what you need...fast. Get quick advice or join the chat
  • Revision:A Level Accounts Module 1 - Returns daybooks

TSR Wiki > Study Help > Subjects and Revision > Revision Notes > Accounting > A Level Accounting Module 1 - Returns daybooks


Returns daybooks


The customer can return goods sold to the original supplier. This can be viewed from firm's perspective as both a customer and a supplier. Sales returned will be treated as returns inwards and purchases returned will be treated as returns outwards.


Each type of returns has its own daybook - one for returns inwards and one for returns outwards.


Contents

Returns inwards

If a customer is unhappy with the goods received then they may return them to the firm. This does not happen automatically but returns inwards are a common feature of business transactions (if they were not then why would we bother with a full daybook solely for each type of returns?). If a firm agrees to accept returns inwards (i.e. customer sending goods back) then the source document used as the basis of recording this transaction is the credit note. The credit note is sent by the firm to the customer who has been allowed to return the goods. The credit note takes its name from the fact that because the firm has agreed to accept returns inwards, we will credit that customer's personal account (thus reducing the debtor balance on that account). A credit note would appear similar to the sale invoice and would mainly contain details of the goods to be returned, and the value of these goods as recorded in the account when the sale was originally made. The credit notes may appear as follows - they may appear in red to avoid confusion with sales and purchases invoices:


To: A Powell

58 Oxford Road

Sheffield

S6 5TU

S Hopkinson

23 Regent Road

Derby

DE1 1JK

3 March 2002
CREDIT NOTE 10045 - -
- Per Unit Total
- £ £
20 Medium Density Fibre boards 15 300
Less 25% Trade Discount - 75
- - 225


Returns inwards journal

The information from the credit notes will be used as the basis for filling out the returns inwards daybook. When posting entries from the returns inwards daybook, we should post each individual entry to the credit side of the personal account of each customer (found in the sales ledger). The total for the monthly returns inwards will be posted to the debit side of the return inwards account in the general ledger. This is completed for the above example below:


Effect on sales ledger:


S Hopkinson
2002 - £ 2002 - £
- - - Mar 3 Returns inwards 225


M Skipsey
2002 - £ 2002 - £
- - - Mar 7 Returns inwards 90


I Rowell
2002 - £ 2002 - £
- - - Mar 18 Returns inwards 145


J Waite
2002 - £ 2002 - £
- - - Mar 22 Returns inwards 310


Effect on general ledger:


Returns inwards
2002 - £ 2002 - £
Mar 31 Total returns inwards for month 770 - - -

Returns outwards

Goods returns by the firm to the original supplier are known as returns outwards. The source document used is the debit note. The firm will send a debit note back to the original supplier which will give details of the goods being returned and the reason(s) for their return. An example of a debit note appears below:

To: A Powell

58 Oxford Road

Sheffield

S6 5TU

G Thompson

29 Swann Road

Manchester

M12 5RE

- 6 April 2002


DEBIT NOTE 143 - -
- Per Unit Total
- £ £
4 sheets of fibre glass - incorrect specifications 50 200
Less 20% Trade Discount - 40
- - 160


Returns outwards journal

The debit notes sent to the original suppliers are used as the basis for completion of the firm's returns outwards daybook.


When posting entries from the returns outwards daybook, we will post each individual entry to the debit side of the personal account of each supplier we are retuning goods to (found in purchases ledger). The total returns outwards of the month would be then posted to the credit side of the returns outwards account in the general ledger.


Effect on purchases ledger:


G Thompson
2002 - £ 2002 - £
Apr 6 Returns outwards 160 - - -


S Cracknell
2002 - £ 2002 - £
Apr 17 Returns outwards 55 - - -


D Scaife
2002 - £ 2002 - £
Apr 25 Returns outwards 210 - - -


Effect on general ledger:


Returns outwards
2002 - £ 2002 - £
Apr 30 Total returns outwards for month 425 - - -


Also See

Comments

These notes are aimed at people studying for AQA A Level Accounting Unit 1, but will also be suitable for other courses and exam boards.

Originally submitted by duke_stix on TSR Forums.

Try Learn together, TSR's study area

177,211
essays

22,142
mindmaps

25,429
revision notes

11,734
quizzes

create
a study planner

thousands
of discussions


New on TSR

GCSE mocks revision

Talk study tips this weekend

Article updates