Question

when a journal entry is: Cr return inward , should i add the Cr amount to sales or should i deduct it?

Answer 1

Hope this will help you.

Explanation:

Return inward means sales return.

A customer who purchases are product may return it due to various reasons.

When a customer returns our product it is called sales return or return inward.

The treatment of return inward is that we need to deduct it from the total sales to ascertain the correct amount of sales.

If the sales value will not be correct then it will have affect on gross profit, which will affect the net profit and finally the balance sheet of the company.

So it is necessary to deduct return inward from the sales.