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


pure monopoly economicsformula of operating leveragedefinition of penetration pricingdifference between durable and nondurable goodsthe autocratic leadership styleproduct bundling strategyindirect quotes examplesdishonour of a billdifference between bearer cheque and order chequethe disadvantages of socialismmeaning of forfeitingunearned revenue balance sheetwhy we prepare trial balancemerits of mixed economydeferred revenue journal entryadvantages globalisationover absorption of overheadspurchase bill discountingfull convertibilitywhat are the advantages of capitalismadvantages and disadvantages of mergers and acquisitionsexamples of substitutes goodsstate the law of diminishing marginal utilityadvantages of jit productionimps transfer full formentry for salary payableadvantages and disadvantages of capitalist economyexample of derivative marketunbilled fees adjusting entryskimming pricing strategy examplesstatutory liquidity ratio rbipayback period meaningnasdaq fullformunearned revenue balance sheetmeaning of trial balancescheduled commercial bank meaningexample of complement goodswhat is law of diminishing returns in economicsadvantages of cashless policywhat is fictitious assetsdisadvantage of globalizationdisadvantages of decentralised structurereasons for failure of mergers and acquisitionssemi durable consumer goodsaccording to the law of diminishing marginal utilitymarginal costing accountingclassification of elasticity of demandadvantages of a centrally planned economyformula to calculate net worth of a companycharacteristics of an authoritarian leaderwhat is an unearned revenuecharacteristics of urbanisationlimitations of jitinterpretation of inventory turnover ratioautocratic coaching stylemeaning of indirect expensesadvantages and disadvantages of cost accountingnatural resources advantages and disadvantagesmerits of mixed economyaccounting entry for unearned revenuecharacteristic of mixed economydifference between horizontal and vertical analysisadvantages and disadvantages of using a debit cardunitary elastic demand curvemarketing skimmingadvantages of fifounearned revenue earned journal entryadvantages and disadvantages of a dictatorshipskimming pricing definitiondisadvantages of financial statementsdupont system of financial analysisebit equationpreference shares advantages and disadvantagesfeatures of monopolistic competition in economics