Correct Accounting Treatment

[SWarb]

I have been asked to treat some product returns as a purchase from the customer rather than a credit issued to them.

The products could be sold for more than the value of the credit so stock valuation wouldn't be a problem.

The result would be to leave the orignal profit on the sales in the P&L and increase the stock values.

This doesn't seem correct but I am struggling to explain the reasons it cannot be done.

Would appreciate your views.

 

[kirby]

I am guessing that the person who asked you to do this bozo thing is the salesman for that account. And I would guess that that salesman gets a bonus on his sales LESS RETURNS. If that's the case don't do it. If its your boss or CEO - ask for a memo from them to "set this as a policy" for you to follow.

 

[cbrier4677]

Bingo

I am guessing that the person who asked you to do this bozo thing is the salesman for that account. And I would guess that that salesman gets a bonus on his sales LESS RETURNS. If that's the case don't do it. If its your boss or CEO - ask for a memo from them to "set this as a policy" for you to follow.

That's what it looks like to me

 

[SWarb]

Thanks for your replies.