Accountancy basics

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This query is : Resolved

Iqbal Singh (Querist)

26 September 2011 When goods bought / sold on cash are returned by the business / to the business, the concerned journal entries are:

(Returned by the business)
Cash A/C Dr.
To Purchases A/C

(Returned to the business)
Sales A/C Dr.
To Cash A/C

When goods bought / sold on credit are returned by the business / to the business, the concerned journal entries are:

(Returned by the business)
Supplier A/C Dr.
To Purchase Returns A/C or Returns Outward A/C

(Returned to the business)
Sales Returns A/C or Returns Outwards A/C Dr.
To Customer A/C

Question: Why in the 2nd case (return of goods purchased / sold on credit) do we use Purchase Returns A/C (or Returns Outwards A/C) / Sales Returns A/C (or Returns Inwards A/C) in place of Purchases A/C / Sales A/C?

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)

26 September 2011 In my opinion in case of cash also you can use Purchase/ Sales return, the impact in both the cases are same as Purchase / Sales return are gonna deducted from the concerned purchase / SAles account,
The impact in both the cases will be the same

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