In part or whole of a consignment of goods found to be defective or of a poor quality, the goods sometime are returned to the supplier and his account is debited. The debit is raised in the Purchase Returns Books, on the basis of debit note. The supplier on receiving the debit note, issues credit note indicating his acceptance of the debit. Thus, on receipt it is attached to debit note. All these entries should be verified by reference to the record Kept in the goods outwards book or the stores record. The original invoices through which the purchases were made also should be referred to for confirming that the nominal account, which was originally debited on the purchases being made, has been subsequently credited on a part or whole of the goods contained in the consignment having been returned. Where the purchase returns are large, either at the beginning or at the close of the year, these might be fictitious, entered to cover bogus purchases recorded earlier. On such a consideration the nature thereof should be
ascertained. The rebate in price and allowances granted by the suppliers should be adjusted through the journal on the basis credit notes received from the suppliers. These should be verified by reference to the original invoices.