Sales Return Journal Entry

Sales Return Journal Entry

In this article we would discuss and explain the Sales return journal entry. Sales return is basically a revenue contra account. This account is used to record the return of sales from the customer.

Separate account is used to record the sales return to exercise better control over the sales. Sales return is account is debited and customer account is credited in the books of account. In case of cash sales return, the cash account is debited in place of customer.

Date	Particulars	Dr.	Cr.
	Customer/Cash	$ xxx
	Sales Return		$ xxx

Sales Return Journal Entry Example

1.    Good returned to Mr. Ali of $ 8000.

2.    Cash Sales return amounting $ 5000.

Date	Particulars	Dr.	Cr.
2014	Sales Return	$ 8,000
2014	Ali A/c		$ 8,000

Date	Particulars	Dr.	Cr.
2014	Sales Return	$ 8,000
2014	Cash		$ 8,000

Sales Return Closing Journal Entry

At the end of financial year, Sales return can either be closed in Sales account or directly in to profit & loss account. The Journal entry under both methods have shown below

Method # 1

In this method Sales are reduced by the debiting the Sales and crediting the sales return account at the end of financial year.

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

Method # 2

In this method Sales return are directly charged to profit & loss account as expenses. It is to be noted that The Sales return is debited to profit & loss account just to reduce the impact of sales.

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