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humbug


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purchase returns book and replacement products
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Hi I am new here so please bear with me!

I am just finishing my course for ICB I and have one last assignment to do and I in a bit of a muddle. and I hoped sopmeone could help me please -

I know if the business has returned a product and the supplier issues a credit note that this transaction is posted into the purchase returns book and later the purchase returns account in the ledger.  But where do the postings go if instead of a credit note the supplier just replaces the product like for like???

Thanks in advance



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Susie Sue


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If the product was just replaced like for like a credit note would not have been issued would it? Or a credit note and a new invoice.

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Sue
Assist Office Services - Bradford Bookkeeper
BackOfficeGroup


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I would agree with Sue, if a product has been replaced, then there would be no accouting records as such and therefore nothing to post.

P

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humbug


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Thankyou both - thats what I was thinking - but we havn't done this scenario yet and I think they are tricking us!!! Thankyou

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kal78


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hi humbug,
i've just finished my course and just waiting to sit final exam in feb, i have never come across this kind of question before, so thank you for asking, its worth taking note. i have noticed sometimes tho that the way some of the questions are asked is quite confusing!!!

hope you get it right by the way

good luck for the rest of your course

kal x

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BackOfficeGroup


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I have thought some on this one and having said all that, if it is for training and not the real world scenario, I would expect a credit to be given on the original invoice and then a new invoice for the new product!

Now in the real world....

P

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Wella


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Hi

I would agree with P, it should be recorded with a credit note and re invoiced, other wise there is no record of the transaction. I do agree in the real world for a small business this may not happen but imagine if it is a big company that has hundreds of returns, it may not be possible to keep track.

Ther is also a side benefit to recording all returns, in so much as it helps analysis of reoccuring damage or faults.

Bill

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humbug


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Thanks for your replies - I have sought advice from my training provider and thought I would post the answer

When making the returns you will credit purchase returns and debit the supplier account

When the replacement arrives - as it is not a new invoice - you will then credit purchase returns and credit the supplier account - just reversing the procedure.

Hope that helps - esp kal - and good luck in your exam!!

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