Q.Kavya Traders had purchased goods from Geetha Traders for a list price of ₹2,000, subject to a trade discount of 10%. Later, the entire quantity was found defective and returned. At what value should this return be entered in the Purchases Return Book, and why?

A return of goods must be entered in the Purchases Return Book at the SAME net value the original purchase was recorded at, not at the gross list price.

The original purchase: list price ₹2,000, less 10% trade discount (₹200) = ₹1,800 net, and it is this ₹1,800 — not ₹2,000 — that was entered in the Purchases Book and posted to the debit of Purchases Account and the credit of Geetha Traders' account.

When the goods are returned, the Purchases Return Book must record exactly the value that was originally recorded for those goods, so that Geetha Traders' account (and the Purchases/Purchases Return accounts) reflect the true net position. Since trade discount was never separately recorded to begin with, there is no separate trade-discount adjustment to make on the return either — the return is simply entered at ₹1,800. …

A common error is entering the return at the full ₹2,000 list price, ignoring that the original purchase itself was never recorded at that figure — a return must alway …