Return outwards day book and its double entry

Return outwards day book is a book of original entry similar to return inwards journal. The purchases return journal day book processes transactions relating to goods returned by an entity to its vendors and suppliers. This article explains this term and also posts its double entry to the relevant ledger accounts.

1. What's Return Outwards Day Book

The return outwards day book also referred to as return outward journal, purchases return day book or journal. It is used to record purchases returned as they occur. When goods are purchased, they are sold to customers. However, there might be some reasons why the business might decide to return the goods to the suppliers. When the return occurs, a credit note is issued by the supplier. With this document, the book keeper or entry officer will record it into the return outwards day book. 

When goods are returned, it is believed that the vendor or seller will not give out cash in return. However, when this occurs it is not returned outward but a cash return from a supplier. Most times, the goods returned are purchased on credit terms rather than cash. After they are posted to the subsidiary book, they are posted to their respective ledger accounts. This is done by applying the double entry principle.

2. Double entry for Return outwards day book

The double entry for Return outwards journal is almost the mirror image of return inwards journal. Except that it involved return outward account and account payable ledger accounts. You can read more about sales return day books here. Therefore, at the end of the period, you should debit the individual creditors a/c in the account payable ledger and credit the return outwards account. That is;

• Dr: Creditors accounts
• Cr: Return outwards account

3. Reasons why purchases returns are done

The reasons are similar to those discussed in a previous article. As a summary, therefore, when products meet their specifications the entity will return them. If bad or spoilt goods are purchased they are also returned by the entity to the vendor. Also, the entity may have bought more than it needed. Therefore, to avoid overstocking it may return to the suppliers.