Chapter 15 return of stocks

1. Chapter 15 return of stocks VCE Accounting Unit 4

2. Theories • What is “credit note”? • Reasons for purchase and sales return; • Principles relate to this chapter; • Characteristics relate to this chapter;

3. Credit Notes • The business document used to acknowledge that goods have been replaced or refunded by our clients. (p 301) Figure 15.1 Credit Note Creditor/supplier Our business name

4. Reasons for Return • Wrong stocks have been delivered; • Damaged products; • Different products have been delivered.

5. Principles • Reporting Period Because we record the return of sales/purchase when the credit notes are issued. • Historical Cost (IDL) original cost of stocks

6. characteristics • Reliable Record return of purchases/sales at their original costs for the current reporting period.

7. Practical – recording and reporting Sample exercise: p 311 - Ex 15.1 -identify the useful information for recording and reporting in credit notes; -distinguish the effects on Sales Return Purchase Return -Change to Profit and Loss Statement, Balance Sheet.

8. Exercise 15.1 Tran’s Toy Store

9. Answer • Credit Note • Wholesale Toy Company issued the document. • Effects: our business returns stock (out)

10. Extras for 15.1 The Double entry will be recorded in Tran’s Toy Store: The Double Entry will be recorded in Wholesale Toy Company:

11. Extra for 15.1 • Stock card for Tran’s Toy (purchase return in stock card)-FIFO method does not apply here.

12. Extra for 15.1 • Stock card for Wholesale Toy Company (sales return in stock card)-FIFO method does apply here.

13. Extra for 15.1 Tran’s Toy (purchase return) Wholesale Toy (sales return)

14. Extra for 15.1 • Changes to accounting reports

15. Working Time • Credit Notes: Ex 15.2, • Return of sales: Ex 15.4 • Return of purchase: Ex 15.5 • Comprehensive: Ex15.10 • Read Stock Cards: Ex 15.13, Ex 15.15 • Comprehensive: Ex 15.16