Returns Inwards and Outward Day Book

Returns Inwards Day Book

When goods are returned into the firm by a customer, the customer is issued a credit note as an acknowledgement of receipts of the goods and a reduction of his indebtedness to the firm. Then the following steps are followed.

1. From the credit note, record the transaction in the returns inwards journal.
2. Credit the personal account of the customer with the amount of goods returned or allowance allowed.

iii.              At the end of the month or other convenient interval, sum-up the sales returns day book and debit the sales account in the general ledger with the total.

Returns Outwards Day Book

When goods are returned to the supplier by the firm, a debit note is sent by the firm (customer) to the supplier. The credit note received from the supplier will simply be an evidence of the suppliers agreement and the amounts involved. The same steps used in Returns Inwards Day Book are used here except that the personal accounts of the suppliers in the purchases ledger are debited while the Return Outwards account in the General Ledger is credited with the total of the returns outward journal.

Example:

You are to enter the following items in the appropriate books, post to personal accounts and show the transfers to the General Ledger.

2014

July 1,         Credit purchase from K. Hanatu N380, M. Nairobi N500, N. Sopuru N106.

3,         Credit sales to E. Rowland N510, E. Philips N246, F. Thompson N356.

5,         Credit purchases from R. Madu N200, J. Chima N180, D. Edwards N410, C. Dantaini N66.

8,         Credit sales to A. Green N307; H. George N250; J. Fata N185.

12,       Returns Outwards to: M. Nairobi N30; N. Sopuru N16.

14,       Returns Inwards from: E. Philips N18; F. Thompson N22.

20,       Credit sales to E. Philips N188; F. Pedro N310. E. Laraba N420.

24,       Credit purchases from: C Fata N550; K. Eni N900.

31,       Returns Inward from: E. Philips N27; E. Rowland N30.

31,       Returns Outwards to: J. Chima N13; C. Dantaini N11.

Purchases Journal

Date	Particulars	Folio	N
1/7/14	K. Hanatu M. Nairobi N. Sopuru	P/L P/L P/L	380 500 106
5/7/14	R. Madu J. Chima D. Edward C. Dantaini	P/L P/L P/L P/L	200 180 410 66
24/7/14	C. Fata K. Eni	P/L P/L	550 900_
31/7/14	Transfer to Purchase account	G.L	3,292

Sales Day Book

Date	Particulars	Folio	N
3/7/14	E. Rowland E. Philips F. Thompson	S.L S.L S.L	510 246 356
8/7/14	A. Green H. George J. Fata	S.L S.L S.L	307 250 185
20/7/14	E. Philips F. Pedro E. Laraba	S.L S.L S.L	188 310 420__
31/7/14	Transfer to sales A/C	G.L	2,772

Returns Inwards Day Book

Date	Particulars	Folio	N
14/7/14	E. Philips F. Thompson	S.L S.L	18 22
31/7/14	E. Philips E. Rowland	S.L S.L	27 30
31/7/14	Transfer to R.I A/C	G.L	97