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Separate Daybook Method

A separate day book method is used when the transactions with regard to goods sent on approval are numerous. Under this method, the following books are maintained
  • Sale or return day book
  • Sale or return ledger

These are memorandum books and hence they are not found in regular books and balances in both the accounts are same and represents the value of goods with customers on sale on return or approval basis.

In this case, when the goods are sent to the customers on sale or return basis, they are recorded in the Sale or Return day book.

When the goods are returned by the customers within the specified time, they are recorded in the Sale or Return day book.

On receipt of acceptance of the goods or if no intimation is received within the specified time, they are recognised as sales and are recorded in the Sales day book.

If, at the end of the year, the goods are still lying with the customers and the specified time limit is yet to expire, the value of the goods lying with the customers must be treated as ordinary stock lying with customers. For this purpose, the following journal entry is passed:


Note: Balance of goods sent on sale or return basis = Goods sent - Goods returned - Goods retained


Illustration 3


A Ltd. supplied goods on sale or return basis to its customers, the particulars of which are as follows:

The goods were sent at 25% profit on cost


Goods are to be returned within 10 days from the date of despatch failing which it will be treated as sales. The books of A Ltd are closed on 31-12-2012. Prepare:


Goods on sales or return, sold and return day book


Goods on sales or return ledger account



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