Return Outwards

Return outwards refer to the goods returned by an organization to its suppliers. They are goods which were purchased from suppliers, however because of being unsatisfactory or a different business reason were returned back to the suppliers, they are also called the Purchase returns.

Returns in accounting refer to the goods returned by a business to its suppliers or by a customer to a business. In one case, it is a sales return and in the other, it is a purchase return. The transaction in both cases was reversed and the concerned sale or purchase couldn’t happen.

The return outwards or purchase return, reduces total purchases of a company and the deduction is shown in the trading account. A subsidiary book, namely Purchase returns/Returns outward, is made to record all such entries.

 

Journal Entry for Return Outwards

 Supplier’s A/C  Debit
   To Return Outwards A/C  Credit

 

Lite© – Learning Initiative Through Examples

Let us suppose that a company named Unreal Pvt Ltd returned goods worth 10,000 to its supplier Star Pvt Ltd. The journal entry to record these returns in the books of Unreal Pvt Ltd will be:

 Star Pvt Ltd. A/C  10,000
   To Return Outwards A/C  10,000

 

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