Studying for my ICB Level 1 exam and im in a bit of trouble.
I need to do a purchase returns-but the account is already settled(all the good were paid for on purchase).Some of them were found to be faulty and have been sent back and a replacement has been asked for.
Im thinking i should do...nothing-as no credit note has been sent back from the supplier and i cant do a double entry on the purchase returns as all the good have already been paid for.
Sorry, still me! Also, he receives the replacement products together with the cost of the postal charges he encounterred for sending them back. Any ideeas on how to entered these transactions? Thank you
You could be right, but what does the question say exactly?
Sounds like purchase was still done through a creditor account in purchase ledger even though was paid immediately. If so, could process cr note to dr their acc and cr purch ret and leave dr bal on creditor acc to be cleared against your next purch or refunded eventually, that way you have complete record of transactions with supplier as well as a purch ret figure for your Trading acc.
Would you wait to receive cr note to post a purchase return? What if was a regular supplier with lots of credit transactions, if cr note fails to turn up or is not posted in time, invoice could be settled in full while replacement goods still not been delivered.
Is this an ICB level 1 past question? They are usually very straight forward. Or is it a practice question from a text book or home study course that is pitched above Level 1?
..........crossed with your 2nd post, hang on...............
-- Edited by PhilMcTankup on Tuesday 28th of September 2010 10:24:52 AM
This is a question from an assignment-last one before the ICB mock exam.
Goods have been bought and immediate payment has been made.Later on, some of the goods were found to be faulty and returned , together with a postal expense for sending them back.
At a later date, the supplier sent replacement together with a cheque for the postal expenses.
Well, he paid postage to return so must have passed entries (dr expense, cr cash or bank if paid by chq). He could just reverse these, probably via bank if postage refunded by chq, but then he would have no record of the original postage expense. Would it be better to credit the refunded postages to a sundry income received account? You decide
Sounds like this could be a question just about processing the postage expenses, if so, previous stuff about purchase returns, credit notes, supplier accounts etc is not relevant. Depends on what has happened in your assignment up to now. Hope previous comments are helpful.
