Sales returns journal

 The sales returns journal is also known as the returns inwards

journal.
 It is a book of original entry or prime entry which is used to record
goods returned by customers previously sold to them on credit.
 The diagram below shows the structure of the sales returns journal.

Sales Returns Journal

Date Particulars Folio Amount
Debit Credit $
$

 Information recorded in the sales returns day book is derived from

the debit note sent to the supplier and the credit note received from
the supplier.
 The debit note (DN) is sent together with the returned goods
stating the reasons for returning the goods.
 Upon receipt of the returned goods and the debit note, the supplier
must be satisfied with the reason(s) why the goods were returned
then the supplier will replace the goods or issue out a credit note
(CN).
 The credit note informs the customer that his or her account is
being credited with the value of the returned goods, this will result
in the reduction of his or her debt.
 The customer will then use the information on the credit note
received from the suppliers and the debit note sent to the supplier
to draw up the sales returns journal.

Reasons for returning goods to the supplier

  Goods can be returned to the suppliers if the customer discovers
that; the goods are faulty, inferior, incorrect type of goods, excess
quantities, damaged or not to specification, the goods will be
returned to the supplier.

Uses of the sales returns journal

The sales returns journal is used to:

 Record returned credit sales of goods in trade by customers.

 Show the reference of the credit note of that respective transaction.
 Show the reference of a transaction to the sales ledger.
 Show the names of customers who would have returned goods.
 Highlight the dates at which the transactions took place.
 Indicate the total of the goods returned that occurred in a period of
time.

Recording and interpretation of transactions in the sales returns

journal

 Here transactions are recorded in the opposite way to that of the

sales journal.
 When making entries in the sales returns journal the following
details must be written;
o The name of the supplier to whom the goods are being
returned to is written in the details or particulars column.
o The amount of each transaction in the credit column.
o The total amount of all returned goods in the debit column.
o A narration," Transfer to returns inwards account or Debit
sales returns account ".
 The narration, “Transfer to debit returns inwards account” shows
that the total value of sales returns will be posted to the debit side
of the sales returns account in the ledger.
  Individual debtors’ accounts in both the sales returns journal and
the ledger are credited with the value of goods returned to the
supplier.
 This is done to reduce the amount they owe the supplier.

Note

 Cash sales returned and the returns of fixed assets sold whether on
cash basis or credit basis are not recorded in this book.
 After recording transactions in the sales returns journal, the
transactions will them be posted to the sales ledger.

Example 1

Enter the following transactions in the returns inwards journal of D.

Danda.

2013 $
Mar 1. G. Masimba returned goods and Credit note 121 600
was issued.
7. A credit note 122 is issued to P. Zara for returned 1 700
goods worth.
10. T. Masara returned goods to us. 900

Answer

Returns inwards journal

Date Particulars Folio Amount

2013 Debit Credit $
$
Mar 1 G. Masimba CN 121 SL4 600
 7 P. Zara CN 122 SL5 1 700
10 T. Masara SL7 900
31 Debit returns inwards account GL5
3 200

 The returns inwards journal above shows that G. Masimba, P. Zara

and T. Masara are credited and returns inwards account is debited
with the their total amount of returned goods.
 Credit notes 121 and 122 were issued to customers for returned
goods.
 In the Sales ledger their accounts will be credited thereby reducing
the cost of goods sold to them.
 The returns inwards account will be debited in the general ledger
with the total of $3 200.
 The folio column is recorded with the pages where the customer’s
ledger account will be found in the sales ledger.

Example 2

Enter the following transactions in the returns inwards journal of K. Mara.

2016 $
Mar 1. Credit note 135 sent to Jabangwe Bros for returned 600
goods.
7. P. Para returned goods. 1 700
 10. An allowance is given to T. Timu for slightly damaged 1 900
goods, credit note 142

Answer

Returns inwards journal

Date Particulars Folio Amount

2016 Debit $ Credit $

Mar 1 J. Jabangwe CN 135 SL3 600

7 P. Para SL5 1 700
10 T. Timu CN 142 SL8 1 900
31 Debit Returns inwards GL12 4 200
Account

Example 3

Enter the following sales returns of K. Kwanda in the Sales Returns

Journal.
2014 $

April 8. Makoni returned goods CN 148 1 500

10. Sold good on credit to T. Nyika 1 000

1 050
11. L. Ranaka returned goods CN 149
700
15. T .Nyika returned goods worth CN 150

Answer

Returns inwards journal

Date Particulars Folio Amount

2014 Debit $ Credit $

April 8 Makoni CN 148 SL19 1 500

11 L. Ranaka CN 149 SL12 1 050
15 T. Nyika CN150 SL13 700
30 Debit Sales Returns GL5 3 250
Account