Purchases Return Journal Entry

Purchases Return Journal Entry

In this article we would explain the purchases return journal entry. Purchase return is a revenue contra account, and used to record the return of purchases. The return purchases are first entered in to purchase return account for better information and control. The purchase returns are closed into purchase account at the end of financial year.

Purchase return is account is credited and creditor account is debited.

Date	Particulars	Dr.	Cr.
	Creditor	$ xxx
	Purchase Return		$ xxx

Purchases Return Journal Entry Example

Good returned to Mr. Ali of $ 7000.

Date	Particulars	Dr.	Cr.
2014	Ali A/c	$ 7,000
2014	Purchase Return		$ 7,000

 

Purchase Return Closing Journal Entry

Purchase return can either be closed in purchase account or directly in to profit & loss account. The Journal entry under both methods have shown below

Method # 1

In this method purchases are reduced by the purchases return with the help of following entry.

Date	Particulars	Dr.	Cr.
2014	Purchases Return	$ 7,000
2014	Purchases		$ 7,000

Method # 2

In this method purchases return are directly charged to profit & loss account as income. The purchase return is credited to profit & loss account to reduce the impact of purchases.

Date	Particulars	Dr.	Cr.
2014	Purchases Return	$ 7,000
2014	Profit & Loss A/C		$ 7,000