Sales Return Book and Sales Return Account in Subsidiary Book

 

What are the reasons to sales return?

Generally, goods are not taken back after sales but sometimes goods are returned on following conditions:

Goods are not according to orders, size, colour, weight.

Goods are damaged.

Goods are in excess of quantity

Goods are defective.

Goods supplied on trial schemes, sale-or-return basis etc.

In above circumstances the primary document is used; that is known as credit note.

 

Credit note

Credit note is also known credit memo.

This document is issued by a seller to a buyer.

Usually, the seller issues a credit memo when there is lower amount than the invoice.

Then repays the money to the buyer or it is set-off against a balance due from other transactions.

Credit notes are also used for rectifying the over-charge, due to oversight and clerical errors.

The credit note contains:

The name and address of both the parties (vendor and purchaser)

Description of goods being returned

The unit price, the number and value of the goods returned

The trade discount allowed earlier and VAT or GST charged etc.

 

Keep in Mind (KIM)

Generally, credit note is sent for following reasons:

To credit the account of debtors, when he returned goods.

To credit the account of debtors for allowance sanctioned.

To credit the account of debtors to rectify overcharge etc.

 

The general format of Credit Note

EP  PUBLICATION
Butwal, Rupandehi
Email: eppublication14@gmail.com
Credit Note
To,			Date:                     15 June 2019
Bibek Pustak Pasal			PAN No.                   345678910
Itahari, Sunsari			Invoice No.                     154/19
			Credit note No.                   5/19
			Order No.                        125/19
We have credited your account with value of below mentioned according to your debit note No. 2/19
DESCRIPTION
Particulars	Quantity	Unit Price			Amount Credited
Cost and Management Accounting	5	595		00	2,975	00
Applied English	10	250		00	2,500	00
					5475	00
Less: Trade discount (5,475@20%)					1,095	00
Net amount					4,380	00
(in words: Four thousand three hundred eighty)
	Manju Chaudhary
Errors and Omissions Expected (E&OE)	For EP Publication

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 4A

Dahal Distributors has following extracted data:

7 August:	Returned from LK Fridge House:
	1 refrigerator @ Rs 25,000 (less trade discount 14%)
14 August:	Returned from ER Electronics:
	1 television @ Rs 8,000.
	2 rice cooker @ Rs 2,200.
	(Less trade discount 12%)
20 August:	Returned from Rakesh:
	Old furniture of Rs 1,500.

Required: (a) Sales return book; (b) Sales return account

[Answer: Credit note = 32,412]

SOLUTION:

Sales Return Book

Date	Particulars	Credit Note	LF	Amount	Amount
Aug 7	Returned from KL Fridge House:
	1 refrigerator			25,000
	Less: Trade discount (25,000 @ 14%)			(3,500)	21,500
Aug 14	Returned from ER Electronics:
	1 television @ Rs 8,000			8,000
	2 rice cooker @ 2,200			4,400
	Total			12,400
	Less trade discount (12,400 @12%)			1,488	10,912
Total credit note					32,412

 

Sales Return Account

Dr							Cr
Date	Particulars            .	LF	Amount	Date	Particulars	LF	Amount
Aug 7	To KL Fridge House		21,500	Aug 14	By Balance c/d		32,412
Aug 14	To ER Electronics		10,912
			32,412				32,412

 

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Click on link for YouTube videos topic wise :
Accounting Equation	http://tiny.cc/c89jkz
Basic Journal Entries in Nepali	http://tiny.cc/uaakkz
Basic Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on link for YouTube videos chapter wise:
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz

#######

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 4B

Sapkota Book House has following extracted data:

7 Oct:	Returned from Sapana Stationers:
	10 copies Business Study @ Rs 250 each
	30 copies marketing @ Rs 200 each
	(Less original trade discount 18%)
12 Oct:	Returned from A2Z Books:
	20 copies Business Mathematics @ Rs 300 each
	5 copies Principle of Accounting @ Rs 550 each
	(Less trade discount 20%)
20 Oct:	Returned from Rakesh:
	Old cycle worth of Rs 2,500.

Required: (a) Sales return book; (b) Sales return account; (c) Sapana Stationers account

[Answer: Credit note = 13,970; Sapana Stationer = 6,970]

SOLUTION:

Sales Return Book

Date	Particulars	Credit Note	LF	Amount	Amount
Oct 7	Returned from Sapana Stationers:
	10 copies Business Study @ Rs 250 each			2,500
	30 copies marketing @ Rs 200 each			6,000
	Total Less: Trade discount (8,500 @ 18%)			8,500 (1,530)	6,970
Oct 12	Returned from A2Z Books:
	20 copies Business Mathematics @ Rs 300 each			6,000
	5 copies Principle of Accounting @ Rs 550 each			2,750
	Total			8,750
	Less: trade discount (8,750 @20%)			(1,750)	7,000
Total credit note					13,970

 

Sales Return Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Oct 7	To Sapana Stationers		6,970	Oct 12	By Balance b/d		13,970
Oct 12	To CK Traders		7,000
			13,970				13,970

 

Sapana Stationers Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Feb 12	To Balance c/d		6,970	Feb 12	By Sales return A/c		6,970
			6,970				6,970

********

PROBLEMS  AND  ANSWERS

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 4A     Sales Return Books  

Agrawal Textiles has following transactions:

Feb 10:	Return from Kamal Cloth House:
	10 meters cotton cloth @ Rs 225 per meter
	15 meters woollen cloth @ Rs 350 per meter
Feb 25:	Return from Sarita Kapada Pasal:
	14 shirt pieces @ Rs 520 per piece (Less 10% trade discount)
	16 meters suiting @ Rs 750 per meter

Required: (a) Sales return book; (b) Sales return account

[Answer: (a) 26,052; (b) 26,052]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 4B     Sales Return Books

The following extracted transactions are provided by City Books:

May 5:	Return from Ranjana Stationery:
	5 accountancy books @ Rs 550 per piece
	5 economics books @ Rs 280 per piece
	(18% trade discount)
May 15:	Return from Thapa Books Center:
	4 dozens ball pens @ Rs 96 per dozen
	6 ream photocopy paper @ Rs 270 per ream
	4 Oxford Dictionary @ Rs 650 (trade discount @ 10%)

Required: Sales return book; (b) Thapa Book Center account

[Answer: (a) 7,747; (b) 4,344]

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