Accounting – 2.3 Books of prime entry | e-Consult
2.3 Books of prime entry (1 questions)
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The sales returns journal is used to record details of goods returned by customers. It provides a record of which goods were returned, by whom, and the reason for the return. This information is important for tracking sales returns, identifying potential quality issues, and adjusting inventory records.
Process of Recording Transactions in the Sales Returns Journal:
- When a customer returns goods, a sales returns note is prepared. This note details the customer's name, the invoice number for the original sale, the description of the goods returned, and the reason for the return.
- The sales returns note is then recorded in the sales returns journal. The date, customer's name, invoice number, description of goods returned, and the amount of the return are recorded.
- The information from the sales returns journal is then transferred to the general ledger. The sales returns journal is posted to the sales returns account in the general ledger, which is a credit account. This decreases the balance of the sales account.
The purchases returns journal is used to record details of goods returned to suppliers. It provides a record of which goods were returned, by whom, and the reason for the return. This information is important for tracking purchases returns, identifying potential supplier issues, and adjusting inventory records.
Process of Recording Transactions in the Purchases Returns Journal:
- When goods are returned to a supplier, a purchases returns note is prepared. This note details the supplier's name, the purchase invoice number, the description of the goods returned, and the reason for the return.
- The purchases returns note is then recorded in the purchases returns journal. The date, supplier's name, purchase invoice number, description of goods returned, and the amount of the return are recorded.
- The information from the purchases returns journal is then transferred to the general ledger. The purchases returns journal is posted to the purchases returns account in the general ledger, which is a debit account. This decreases the balance of the purchases account.