Accounting for Returned sold stock

I sell to some my clients on Sale-or-Return basis, eg, if i raise an invoice for 100 units of item at £3 each £300 total but the client returned 40 units unsold items from the invoice.

How do i record the returned stock please?

How did you enter the initial sale? Normally you’d log this on an invoice and post it to ‘general purchases’. All you’d need to do then is just issue a partial credit note on the original invoice.

Do you get paid for items on Sale-or-Return basis straight away? Who retains the risk and ownership of goods? If not then In theory Sale-or-Return basis is not real sale in first place, you should book sales for those items only which have actually been sold to actual customer, its practically holding stock at 3rd party.

I don’t get paid for the items on sale-or-return straight away, hence i retain ownership of the goods until sold by the client.

I usually raise an invoice for the items before delivery to the client, so that any payment i receive from the client, i can log against the invoice.

Am i doing it the right way or is there alternative method please?,

Also i now have an issue whereby some stock i supplied the client towards the end of my last accounting year was returned in the current accounting year, how do i allocate these returns to reflect on previous accounting year.

thanks a lot.

It seems OK to me, presumably the client will then pay you later only for the items they are able to sell? At which point you could just log the payment to the invoice and enter a negative line to adjust out any items unsold.

I will add, I’m not an accountant/bookkeeper so it’s always worth seeking professional advice.