Return Inward Meaning Journal What Is Return Inward

Return Inward Meaning

Return Inward, also known as sales return, refers to the goods returned to the business entity when the customers find that the goods delivered did not meet their expectations and, therefore, were unsatisfactory. It directly affects the operating activities of the business. Hence, the returned goods are recorded in the Return inward journal from the copies of the credit noteCredit NoteA credit note is a financial document that sellers provide to buyers as a token of confirmation against registered returns. It acknowledges the cancellation and lets the sellers make a credit entry to the buyers’ account for the required amount. read more sent to the customer who returned goods or was overcharged.

In the Journal:

The records are made in chronological order, with the name of the customer and the number of goods the customer has returned.Entries are recorded at a list price less than any discount provided.Entries are supported by credit notes which are sent to the customer.

Return Inward Example

Below is the example of Return Inward –

The below example can be understood concerning the total amount generated in the “Return Inward Journal,” which is transferred to “Trading Account Format.” Various sales entries are accounted for a month (time duration differs from organization to organization) and are noted serially.

Return of journal monthly total is transferred to less return in “Trading Account Format.”

Accountability of these entries becomes useful as it is a mere addition to the amount that has been undertaken as there is a return in sales.It is shown on the credit side of the “Trading Account Format.” Just below the sales, the total amount of return calculated from the “Return Inward Journal” is put into place.When return inward is more, this indicates to the company about the related product. These issues must be addressed immediately, affecting the company’s sales.

Advantages

It is an important element while preparing a trading account. It helps the management decide the price of the product. One can decide whether or not to continue with a required product.

Each sales returns need to be debitedDebitedDebit represents either an increase in a company’s expenses or a decline in its revenue. read more from the sales return account.Value, quantity, and reasons for sales returns can all be known from the sales return book.Also, the total amount of sales returns can be obtained.Clerical work can be reduced by using a sales return book.Errors committed if any while writing the sales return book is normally detected at the time of posting to the sales return account.As sales return is recorded serially in the sales return book, particulars of any sales return on any day can be located in the sales return book.

Disadvantages

It becomes very important to include return inward. If projected without return inward, the total sales amount would reflect the incorrect amount in the accounting. Still, the entire entity is carried in a separate journal, because of which it becomes very important to carefully note all the values in the returned journal under the different headings and update them regularly.

Important Points to be Noted for Change of Return of Inward

Various software technologies have been introduced to record the return inward. This is to avoid various errors coming up in the report. But there are a few elements essential for writing return inward such as date, details, identification no, related identification nos about the goods which need to be taken care of.