Treatment of Purchase Return

ENTRY FOR Purchase

PUR 5% LOCAL DR 70000
INPUT VAT 5% DR 3500
                         TO A LTD 73500


GOODS RETURN COMPUTATION
PUR RETURN 12000 (120*100)
+ VAT 5%         600
TOTAL             12600

ENTRY
A LTD DR 12600
              TO Purchase 5% LOCAL 12000
              To Input Vat 5% 600

Since party is debited in this entry ,we will issue a debit note