Purchase returns day book
So a quick reminder of the double entries for purchases and purchase returns:
When a purchase is made:
| Dr purchases | X net amount |
| Dr VAT | X VAT amount |
| Cr payables (PLCA) | X gross amount |
When a purchase is returned:
| Dr payables (PLCA) | X gross amount |
| Cr VAT | X VAT amount |
| Cr purchase returns | X net amount |
So we know where there are purchases, there can be returns.
So to summarise what happens, anything posted to the purchase day book is then posted to two places:
- Double entry to the general ledger
- Individual memorandum ledgers are updated.
The same will need to happen with the purchase returns day book – after all, it’s the supplier we bought on credit from, who we are returning the goods to.
So when a purchase return is posted to the purchase returns day book, it will also need to be posted to the same two places:
- Double entry to the general ledger
- Individual memorandum ledgers are updated.
Have a look at the PDF below called ‘Recording Credit Purchases – an Illustration’ to see the purchase day book and purchase returns day book in action.
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