Question

Purchased goods for Rs 20,000 from X and supplied it to Y for Rs. 26,000. Y returned goods worth Rs. 7,800 which in turn were returned to X?
Pass The Journal Entry

Answer 1

Answer:

purchase a/c dr.   20,000

              to cash a/c(or x a/c in case of credit purchase) 20,000

y a/c dr. 26000

         to sales a/c 26000

sales return a/c dr.  7800

             to y a/c  7800

x a/c dr. 6000

          to purchase return a/c 6000

Explanation:

the purchase return amount results les because the goods sold to y were at a profit of 30%(20,000*30/100=6000; =26,000), so while returning the purchased goods, the profit amount had to be deducted from 7800(ie, 7800*100/130= 6000)

Answer 2

Answer:

Journal entry:

1. Purchases a/c             dr.  20,000

       To X's a/c                         20,000

(being goods purchased from Mr.X on credit)

2. Y's a/c                         dr. 26,000

       To Sales A/c                         26,000

(being goods sold to Mr.Y on credit)

3. Sales Return A/c          dr. 7,800

      To Y's a/c                             7,800

(being sold goods returned by Mr. Y)

4. X'sA/c                  dr.               7,800

     To purchase Return A/c              7,800

(being purchased goods are returned to Mr. X)

Notes:

1. As we know that accounting is based on a double entry system so we can conclude that we debit purchases and if we get a return on purchases then we pass the vice versa entry i.e, credit the purchases return. Similarly, this happens with sales and sales returns.
2. Secondly, it is not mentioned in the question that goods are sent on credit but according to the sales return and purchase return concept, it is only done if goods are purchased or sold on credit.

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