Larkhill School returns four unopened reagent bottles to Helix Lab Supplies and a week later receives a credit note for $186. The school runs the full range...
Question 1 Report
Larkhill School returns four unopened reagent bottles to Helix Lab Supplies and a week later receives a credit note for $186. The school runs the full range of day books. Where is this credit note entered first?
Answer Details
The school is the buyer. It has sent goods back to a supplier, so this is a return outwards, and the credit note received is the evidence for it. In a full set of day books it is entered first in the purchases returns journal, whose monthly total is later credited to purchases returns and debited to the purchases ledger control account.
The sales returns journal is for credit notes the business issues when its own customers return goods, which is the opposite direction. The purchases journal records invoices received, not reductions of them. The general journal is reserved for items that fit no other day book, such as corrections and the opening entries, and a routine return is not one of those.
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