Journal Entry of Purchases
Cash Purchases
Credit Purchases
Debit
Credit
Debit
Credit
Purchases
Cash
Purchases
Accounts
Payable
Purchases Returns and Allowances (Returns Outwards)
When a business returns goods or, for some reason, receives an
allowance on goods it has already purchased, it will expect to receive a
credit note from the supplier of the goods. Suppose a number of such
credit notes are received. These credit notes may be entered into a
Purchases Returns and Allowances Book
and the necessary Ledger postings made
from that book, i.e. a debit to each of the
Accounts Payable and the total credited to a
Purchases
Returns
and
Allowances
Account. Alternatively the debit entries may
be made direct from the credit notes and the
total credited to the Purchases Returns and
Allowances Account.
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