Buyer returns, or returns outwards, are a normal part of business. Goods may be returned to
seller if they carry defects or if they are not according to the specifications of the buyer. Accounting
for Buyer returns there is need to account for Wholesale returns as though no purchase had
occurred in the first place. Hence, the value of goods returned to the seller or warehouse must be deducted
from buyer. The buyer can generate the credit note for the receivable items or rate difference note against the buyer order.
The seller has several options for compensating the buyer for any returned goods, which include:
a. A credit note memo that the buyer can apply against its next payment to the seller
a. A rate difference note against total amount of item
c. An outright cash payment to the buyer
When the buyer records a purchase return, it can be either as a credit to its inventory account (if there are few such transactions) or to a purchase returns account (if management wants to
segregate this information for further analysis). The offsetting debit is to the accounts payable account.
See Also: Wholesale Order | Wholesale Invoice