Question

The periodic total of Purchases Return Journal is posted to — ?

• A. Purchases A/c
• B. Purchases Return A/c
• C. Sales Return A/c
• D. General Ledger

Answer 1

Answer:

B. Purchases Return A/c

• The Purchases Return Journal (or Returns Outward Journal) records all goods returned to suppliers.

• At the end of the period, the total of this journal is credited to the Purchases Return Account in the ledger.

• The individual suppliers’ accounts are debited in the creditors’ ledger.

So, the posting is:

Ledger	Debit	Credit
Creditors’ Accounts	xxx
Purchases Return Account		xxx

Therefore:
The periodic total of Purchases Return Journal is posted to the Purchases Return Account.

 What the Purchases Return Journal records:

This journal lists goods we return to our suppliers (creditors) because they were damaged, incorrect, or unwanted.

For example:

• You earlier bought goods on credit from M/s Alpha Traders worth ₹5,000.

• Now you return ₹1,000 worth of those goods.

 

Journal entry for this transaction:

When we return goods to a supplier:

Particulars	Dr (₹)	Cr (₹)
Creditors (Alpha Traders) A/c	1,000
Purchases Return A/c		1,000

Purchases Return is not an expense; it is treated as an income (contra to purchases).

 

When we return some goods:

• Our liability decreases (we owe less to the supplier).

• To reduce a credit balance, we debit the Creditors Account.

Hence:

Creditors A/c — Debited (reduces liability)
Purchases Return A/c — Credited (reduces purchases/expense)

 

 At the end of the period:

• Each supplier’s account is debited individually.

• The total of the Purchases Return Journal is credited to the Purchases Return Account.

• Creditors come into the entry because they are the ones we originally bought from.

• When we return goods, our debt to them decreases — hence, Creditors A/c is debited.