John Hay In: Category - Accounting OthersHow is return outwards treated in trial balance?return outwardstrial balance ShareFacebook1 AnswerVotedRecent Dheeraj 2020-08-06T21:45:48+05:30Added an answer on August 6, 2020 at 9:45 pm This answer was edited. Return OutwardsIn the layman language, return outwards refers to the goods returned by the customer to the supplier (or) manufacturer due to various issues found in the goods (say- quality, defects or damages). Return outwards is also known as purchase returns.The amount of return outwards (or) purchase returns is deducted from the total purchases of the firm. It is treated as a contra-expense transaction. Return outwards holds credit balance and is placed on the credit side of the trial balance.To make this concept easy and understandable, I would like to add an example and trial balance (tabular format) for the above explanation.Example- Mr Alex (a dealer in the washing machines) purchases 10 washing machines for 1,00,000 from Amazon on a credit period of 30 days. On 20th April he returns all the washing machines to Amazon due to the serious defects in all of its models. Pass journal entries for the above transaction in the books of Mr Alex.In the books of Mr Alex (Modern Approach)a) Entry on the purchase of goods from AmazonDateParticularsL.F.AmountNature of AccountAccounting Rule1st AprilPurchase a/c Dr100,000ExpenseDebit- The Increase in Expense To Amazon a/c 100,000LiabilityCredit- The Increase in Liability(Being goods purchased on credit from Amazon)b) Entry on the return of goods purchased from Amazon.DateParticularsL.F.AmountNature of AccountAccounting Rule20th AprilAmazon a/c Dr100,000LiabilityDebit- The Decrease in Liability To Purchase returns a/c 100,000ExpenseCredit- The Decrease in Expense(Being goods returned to Amazon due to serious defects)Placement in Trial Balance0Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerCancel replyYou must login or register to add a new answer.