• Stage two: Goods Returned to the Supplier (Optional)

    1. Returns Outwards Journal

      This is a book of original entry which is used to record goods which have been returned to the supplier by the buyer due to some discrepancies. It is prepared by the buyer of good after receiving an incoming debit note from the supplier. This is where it starts, when the buyer of goods notices some sort of discrepancies such as physical damage, wrong quality or quantity or wrong specifications, he prepares a damaged goods note and sent it back to the seller together with the goods with issues. The damaged goods note narrates the reason why the goods are being returned. It is on the basis of this damaged goods note that the seller will prepare a debit note to correct an over charge in the invoice earlier sent to the buyer. In the next illustration two, we will demonstrate how transactions of damaged goods is recorded in the book of original entry using the relevant source document as follows;

      Return outwards example

      18-02-18 goods worth $700 from U-One ltd were damaged and returned to the supplier

      19-02-18 goods worth $300 from U-Two ltd had some discrepancies and were returned to the supplier

      The corresponding source documents and the affiliated book of original entry used are as follows;

      Step One: Recording transactions in the Source documents

       

      18-02-18 goods worth $700 from U-One ltd were damaged and returned to the supplier

      returns-outwards-journal-1

      19-02-18 goods worth $300 from U-Two ltd had some discrepancies and were returned to the supplier

      returns-outwards-journal-2

      Step two; transferring the transactions from source documents to the book of original entry

      The corresponding book of original entry used is;

      returns-outwards-journal-3

      NB1: The learner should note that for all the documents used, no DEBIT or CREDIT columns that has been used to record the various transactions. The amounts are simply recorded on the amount column. This is because the double entry principle does not apply at this stage. In fact, that is the reason why we transfer information from the source documents to the respective books of original entry.

      NB2: That, information in the incoming debit note is used to prepare returns outwards journal.