Journal Entry for Sales Return

Sales is done by every company because without sales a company cannot survive but just like everything is not perfect not all sold items are perfect which leads to sales return from the customers to the company. Sales are made in two ways one is cash sales and other is credit sales and company has to make entries in the books of accounts so as to make adjustment for sales return, lets look at the journal entry for sales return for both cash return sales and credit return sales–

Cash sales return

When goods are sold in cash and they are returned then the following journal entry is passed –

                         Sales return account Dr

                                      To cash account

In the above since goods have returned sales return account is debited and the company has given back cash to the customer and that is the reason why cash account is credited following the principle credit what goes out.

Credit sales return

When goods are sold on credit and they are returned then the following journal entry is passed –

                          Sales return account Dr

                                               To Receivable account

In the above, since goods have returned sales return account is debited and since debtors have reduced receivable account is credited so as to reflect a decrease in the asset of the company.

As one can see from the above that sales return apart from having a negative impact on the image of the company, it also requires some adjustments in the books of accounts of the company so as to reflect the true picture about the sales of the company.

0 comments… add one

Leave a Comment


Related pages


unearned income accountingexample of unearned revenuedefine draweeadvantages and disadvantages of mixed economy pdforganizational structure advantages and disadvantagesmarginal costing in management accountingadvantages and disadvantages of a joint venturewholesale banking definitionwithdrawal slip in bankfull form fdiunitary elastic demand examplewhat is rate sensitive assetsadvantages of audit programmehow to prepare fund flow statement with exampleincome method to calculate national incomeadvantage of hire purchaseglobalization drawbacksdifference between overdraft and term loanprofitabilty ratioprepaid wages journal entrydefine consignerbackward integration advantages and disadvantagesbackward integration exampleswhat is skimming pricingadvantages of barter tradeagro based industry definitiondisadvantages of break even analysischaracteristics of a capitalist economydirect and indirect quotation for exchange ratesintroduction of demat accountwhat is the meaning of cross chequewhat is the law of diminishing utilitydefinition of forfeitingtypes of elasticity of demand with diagramrtgs full meaningskimming pricesvertical analysis of the balance sheetadvantages of a dictatorshipdefinition of inferior goodsdiminishing returns exampleseconomic growth advantages and disadvantagesdictatorship disadvantagesdisadvantages to democracymeaning of escrow account in bankdefinition of proprietorsdisadvantages of economic value addedexamples of goods with elastic demandrelationship between bonds and interest ratesunearned service revenue journal entryadvantages and disadvantages of m&aimportance of capital budgeting techniquesdiscounting bill of exchangewhat is the difference between direct cost and indirect costexamples of capital budgeting projectssimilarities between socialism and capitalismdemerits of mixed economyeffect of advertisement on monopolistic competitiondefinition of consigneetypes of cheques crossingmonopolistic companycrr and slr differenceaccounting entry for prepaid expensescentrally planned economy advantagesfeatures of globalisationmoil ipo pricedirect investment advantages and disadvantagescost oriented pricing exampleideal ratio of debt equity ratiodisadvantages of international marketingcheque vs draftmeaning of monopolistic competition