As the Business expands the number of complaints and returns inwards also increases. Such return inwards can be recorded in the sales journal as a negative entry if these are very little in number. But because of its reverse nature it is recommended to maintain a separate journal to record Sales Return. Here one very important concept should be remembered that in Sales Return Journal only the returns against credit sales (from Debtors) are recorded. Normally, it doesn’t happen that return of goods sold against cash are accepted by a business because certainly against such return the business would have to make refund of money already received. That’s why in coming practice you will not find any such transaction. But obviously if you have any example of such transaction in your business, it will be recorded in cash book as a payment.

Supporting document:

When a business receives back its sold goods it issues a “credit note” to the debtor returning goods, which evidences that we have received the returned goods and accept that money for such sales will not be received in future. A “credit note” issued is an evidence of reduction in sales income and also in the amount of debtors. It is also said that a “credit note” is a reversal document of an “invoice” which cancels the effect of it. Like an “invoice”, a credit note is also given a number and also possesses a reference of sales invoice against which such return were made. Rest of the contents of credit note are commonly understood, such as:

. Name & Address of the business (Seller)

. Name & Address of the customer

. Date

. Particulars

. Quantity

. Rate

. Amount