Return Outwards Journal

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Return Outwards Journal or Return Outwards Day Book or (Purchase Returns) – Definition and Explanation:

Return outwards journal sometimes call return outwards day book or (purchase returns). It is used to record purchase returns to suppliers.

Preparation Procedure of Return Outwards Journal and Format:

When goods are over charged or returned to suppliers then a debit note may be sent to suppliers giving details of the goods and the reason for their returns. On receipt of goods returned suppliers may issue to business (customer) a credit note to reduce the amount owed  by the business. These credit notes when received by the business are used to prepare return outwards journal or return outwards day book or (purchase returns).

The form of credit notes may vary from business to business but they all show the same basic information and include name of the supplier on the top with name of the customer (trade receivable), the date of return, the rates, quantities and total value of goods returned. If goods returned were originally purchased after receiving some trade discount then like purchases journal, amount entered in return outwards journal must be net of trade discount. Follow the steps below:

(i) Purchases returns

(ii) Credit notes received

(iii) Recording in return outwards journal, as:

(a) Individual amounts posted to debit side of suppliers’ accounts in purchases ledger.

(b) Total amount posted to credit side of return outwards account in general ledger.

The following return outwards journal format is used by the businesses:

return outwards journal format

Procedure of Posting Entries from Return Outwards Journal to the Ledger:

Return outwards (purchase returns) recorded in the returns outwards journal are posted individually to the debit side of the personal account of the each relevant supplier in the purchases ledger. In addition, the total amount of return outwards at the end of each period is credited to the return outwards account in the general ledger. Return outwards can be explained with the help of following example: 

Solved Example:

The following is a return outwards journal of a business for January 2019:

Return Outwards Journal (Purchase Returns):

return outwards journal example


Explain the above return outwards journal and posting its items to purchases ledger and general ledger (return outwards account):


The double entry is completed by debiting the appropriate accounts of suppliers in the purchases ledger and crediting the total to returns outwards account in the general ledger. This is shown as follows:

Purchases Ledger:

purchases ledger in returns outwards

General Ledger (Returns Outwards Account):

returns outwards account