In view of the coronavirus pandemic, we are making LIVE CLASSES and VIDEO CLASSES completely FREE to prevent interruption in studies
Sale of Goods on Approval or Return Basis

Goods sent Numerously

Sometimes the goods are sent to the buyer with an option to keep them or return them. This is known as Goods sold on approval or return basis. When the goods are sold on approval or return basis there is a change in the possession of goods. However, the ownership of goods is transferred only when the goods are approved by the buyer. We will here discuss the treatment for Goods sent numerously.

Goods Sent Numerously

When goods are sent numerously on sale on approval or return basis, then it is advisable to keep a separate set of books. For this purpose Sale or Return Day Book and Sale or Return Ledger are maintained. However, both these books are Memorandum Books.


Goods sent to the customer on sale on approval or return basis are recorded in the Sale or Return Day Book. Thereafter, the customer’s accounts are individually debited in the Sale or Return Ledger while the Sale or Return A/c is credited with the total of the Sale or Return Day Book.

In terms of goods sent numerously, goods returned by the customer within the specified time limit are first recorded in the Sale or Return Day Book. After this, the customer’s accounts are individually credited in the Sale or Return Ledger while the Sale or Return A/c is debited with the total of the Sale or Return Day Book.

Goods sent Numerously

(Source: featurepics)

Goods accepted by the customer and the goods regarding which no intimation is received within the specified time limit are treated as sales. These are recorded in Sales Day Book. The customer’s accounts are individually debited while the Sales A/c is credited with the total of the Sales Day Book. In order to cancel the earlier entries, individual customers accounts are credited and the Sale or Return A/c is debited.

Browse more Topics under Sale Of Goods On Approval Or Return Basis

Journal Entry for Approved Goods sent Numerously

In the Memorandum Sale or Return Ledger

Date Particulars   Amount (Dr.) Amount (Cr.)
1. When the goods are approved Sale or Return A/c Dr.  xx  
To Individual Customer’s A/c  xx
(Being goods approved at invoice price and earlier entry canceled)  

In the regular General Ledger

Date Particulars   Amount (Dr.) Amount (Cr.)
1. When the goods are approved Individual Customer’s A/c Dr.  
To Sales A/c  
(Being goods approved at invoice price and treated as sales)  

 At the end of the year, the credit balance of the Sale or Return A/c in the Sale or Return Ledger represents goods still awaiting approval. These goods are treated as inventories and recorded in the Regular books of accounts.

Journal Entry for recording inventories

Date Particulars   Amount Amount
1. For the goods lying with the customer at the year-end Inventories with customers on Sale or Return A/c Dr.  xx  
To Trading A/c  xx
(Being goods waiting for approval recorded as inventory at cost/market price, whichever is less)  

Solved Example For You

Q. M/s Kamath Textiles supplied goods on Sale on approval or return basis to its customers. The transactions for the month of March 2018 are as under:

Date Customer’s Name Amount (₹) Remarks
5 Mar A Ltd. 10000 Accepted on 16 March
9 Mar B Ltd. 16000 Returned goods worth ₹6000 on 13 March
11 Mar STR Ltd. 11000 No intimation till 31 March
15 Mar XYZ Ltd. 25000 Accepted goods worth ₹20000 on 20 March, balance returned.
20 Mar KM Ltd. 30000 No intimation till 31 March
25 Mar CBZ Ltd. 8000 Returned on 30 March
30 Mar P Ltd. 12000 No intimation till 31 March

Goods have to be returned within 15 days else they will be treated as sales. Prepare the Sale or Return Day Book and Sale or Return Total A/c.

Ans. In the books of M/s Kamath Textiles

Sale or Return Day Book

Date Customer’s Name L.F. Amount (₹) Date Sold (₹) Returned (₹)
5 Mar A Ltd. 10000 16 Mar 10000
9 Mar B Ltd. 16000 13 Mar 10000 6000
11 Mar STR Ltd. 11000 26 Mar 11000
15 Mar XYZ Ltd. 25000 20 Mar 20000 5000
20 Mar KM Ltd. 30000
25 Mar CBZ Ltd. 8000 30 Mar 8000
30 Mar P Ltd. 12000
112000   51000 19000

Sale or Return Total A/c

Date Particulars Amount Date Particulars Amount
31 Mar To Returns 19000 31 Mar By Goods sent on sale or return 112000
To Sales 51000
To Balance c/d 42000
112000 112000

 

Share with friends

Customize your course in 30 seconds

Which class are you in?
5th
6th
7th
8th
9th
10th
11th
12th
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
tutor
tutor
Ashhar Firdausi
IIT Roorkee
Biology
tutor
tutor
Dr. Nazma Shaik
VTU
Chemistry
tutor
tutor
Gaurav Tiwari
APJAKTU
Physics
Get Started

Leave a Reply

avatar
  Subscribe  
Notify of

Stuck with a

Question Mark?

Have a doubt at 3 am? Our experts are available 24x7. Connect with a tutor instantly and get your concepts cleared in less than 3 steps.
toppr Code

chance to win a

study tour
to ISRO

Download the App

Watch lectures, practise questions and take tests on the go.

Get Question Papers of Last 10 Years

Which class are you in?
No thanks.