Sales Return or Returns Inward Book

When a business sends the ordered goods back to a vendor it is recorded in sales return book. At times the buyer may return goods due to poor quality, inaccurate quantity, untimely delivery or other reasons. It is also called returns inwards and an appropriate sales return or a returns inward book is maintained. All returns are primarily recorded in the sales return book unless the returns are not that frequent, in which case they are recorded in the journal.

 

Sample Format of Sales Return Book

 Date  Particulars  Credit Note No.  LF.  Currency  Amount

 

Note: A column for “Remarks” can also be added to the Sales return book which would include a brief description of the reason why the goods were returned.

 

When the goods are returned by the customer, a credit note will be prepared and sent out to his name. A duplicate copy is kept for recording and reference purposes. The returns inward book is totaled at the end of each month.


 

How to Post Entries from Sales Return Book into Ledger?

After the sales returns book is properly updated and all transactions are entered into it, the total of the items is transferred to ledger in an account called the “Sales returns account”

  1. At the end of the day, each entry is posted to the credit side of the appropriate individual’s account in the Debtors’ ledger as this helps the account to remain up to date.
  2. At the end of the month, the total of the “Amount” column is posted to the general ledger with the help of following journal entry.

 

Journal entry for sales returns

 Sales Returns A/C  Debit
   To Debtors  Credit

 

Lite© – Learning Initiative Through Example(s)

 Let’s assume that total sales returns made at the end of a month are 50,000.

  1. Returns made by A are 30,000.
  2. Returns made by B are 20,000.

These 4 different ledger accounts will be updated from the sales returns book.

 

Sales Return A/C

 Date  Particulars  Amt  Date  Particulars  Amt
 mm/dd  To Sundry Debtors A/C  50,000

 

 Sundry Debtors A/C

 Date  Particulars  Amt  Date  Particulars  Amt
       mm/dd  By Sales Returns A/C   50,000 

 

A’s Account

 Date  Particulars  Amt  Date  Particulars  Amt
 mm/dd  By Sales Returns A/C   30,000

 

B’s Account

 Date  Particulars  Amt  Date  Particulars  Amt
 mm/dd  By Sales Returns A/C  20,000

 

>Read Sales Book