Journal Entry for Credit Purchase Return

Journal Entry for Credit Purchase Return

In this article we would discuss the journal entry for credit purchase return. The credit purchase return is credited being decrease in expense and creditor’s individual account is debit. A sample journal entry for credit purchase return is shown below;

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Creditor Individual a/c		xxx
01-01-2017	Purchase Return			xxx

The above transactions may also be recorded by crediting the purchase account and debiting the creditor individual account. However, this accounting treatment provides little information about purchase return as purchase account would show net purchases in the trial balance.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Creditor Individual a/c		xxx
01-01-2017	Purchase			xxx

 Example Journal Entry for Credit Purchase Return

Credit purchases amounting 135,000 were made from ABC, later on the purchased items were returned to ABC as goods were lacking quality. The following scheme of journal entry would be recorded in the books of accounts.

The following journal entry shall be recorded for credit purchase. Purchase account would be debited and ABC account would be credited.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Purchase		135,000
01-01-2017	ABC			135,000

The following journal entry shall be recorded for credit purchase return. The ABC account would be debited and purchase return account would be credited. Using a separate account for purchase return provides significant controlling information about purchases.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	ABC		135,000
01-01-2017	Purchase Return			135,000