The major differences between a return inward and a return outward are as follows −
- Return inward is defined as the seller returning the goods back due to various reasons (defective, incorrect goods etc.)
- Return inward transactions starts, when the seller receives sold goods back.
- It occurs next to return outwards.
- The journal entry for return inward is as follows −
|Return inwards A/c|
To customers Ac
- It is recorded in seller books of accounts.
- Impact − Reduces seller sales and creates liability.
- In financial statements, it is disclosed in reduction from sales in the seller trading account.
- The consequences are goods resale or refund for sale.
- The format of return inward is as follows −
|Date||Name of customer||Credit note||Folio||Amount|
- Return outward is defined as, goods returned back by buyer to seller.
- Return outward transactions start, when the buyer returns the purchased goods.
- Occurs before returning inward.
- The journal entry is as follows −
To Return outwards A/c
- Recorded in buyers books of accounts.
- Impact − Reduces buyer purchases, creates assets.
- Disclosed as reduction in buyer trading account in financial statements.
- The consequence is that it pays an amount or exchange (new goods)
- The format is as follows −
|Date||Name of customer||Debit note||Folio||Amount|
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