You are the bookkeeper at a small merchandising firm. You are comparing the income statements from the last t

Question

You are the bookkeeper at a small merchandising firm. You are comparing the income statements from the last three years. You notice the Purchases Returns and Allowances account (as a percentage of net sales) has been increasing at an alarming rate. If you were a manager, who would you speak to in the organization to help you understand why so much merchandise is being returned

Answer 1

Customer service department or whomever is in charge of authorizing returns. Find out for what reasons which products have been returned and determine from there which course of action to take - Either more strict return rules or dropping the products shown to have a high return rate. It depends on the reason for the return, the product itself and the current policy.