Difference Between Carriage Inwards And Carriage Outwards In The Income Statement

August 11th, 2006 /

Return Inwards:

Goods already sold by the company were returned to the business by the customers sometimes later.

Goods can be defective, not according to specification or damage.

When goods are returned by customers, the company issue a credit note to the customer.

Accounting Treatment:

Debit: Return Inwards Account

Credit: Customer’s Account

In the Income Statement:

Sales XXX

Less: Return inwards (x)

Net Sales YYY

Return Outwards:

Goods purchased from the suppliers and subsequently return to the suppliers .

Goods outwards maybe due to wrong quality, damage, wrong specification, etc

In this case when goods are returned to suppliers, credit notes will be received from the suppliers.

Accounting Treatment:

Debit: Creditor Account

Credit: Return Outwards A/c

The Return Outward a/c will be debited to the Purchases account to reduce the amount as lesser value of goods are received as a result of the return of goods to the suppliers.

Comments RSS

CHARITY
I APPRECIATE HOW U EXPLAIN THE RETURN INWARD AND RETURN OUTWARD, BUT I WANT EXPLANATION ON THE DIFFERENCE BETWEEN CARRIAGE INWARD AND CARRIAGE OUTWARD
Uzziel
I appreciate the way in which you explain return in wards and return out wards. but I need more clarification on theai nature; are they part of nominal accounts? or real Account? or income and expenses Accouints
charity b
i appreciate how u explained the returns in and out but can u explain carriage in and out as well as if opening stock is debited or not and vat due thanks

TrackBack URI