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What is the return outward book and give its format?
This book records the goods returned to suppliers. It is also called a purchase return day/ outward book. Goods return affects the companies' total purchases or accounts payable.
Return outwards reduces business payables for suppliers and business expenses.
The journal entry for a return outward book is as follows −
|To Return outwards A/c||Credit|
How it affects business
- Reduces accounts payables. Both sale return and purchase return are reversed and purchase or sale is nullified. These deductions are shown in the trading account. To these entries a separate book called "purchase returns book" is maintained.
The return outward process is explained below with the help of a diagram −
The format for the return outward book is as follows −
|Date||Name of customer||Debit note||Folio||Amount|
Debit note is prepared when goods are overcharged or returned and sent to supplier (details of goods and reason for return) and supplier issues a credit note (on receipt of goods) and amount is reduced from business.
Credit notes are not the same for all businesses, they may vary. Basic information includes supplier names & customer name, date, goods details (includes goods description, quantity etc.).
Steps followed are as follows −
- Purchase return.
- Credit note received.
- Recording journal (return outward).
- In purchase ledger, Amount posted on debit side (suppliers).
- In general ledger, amount posted on credit side (return outwards).
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