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???
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!!!
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!
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.
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!!
