DEBIT AND CREDIT NOTES
DEBIT AND CREDIT NOTES
Every time, I heard the words , DEBIT AND CREDIT NOTES, I used to get stuck at it and used to think
over it again and again and wasted my time and I am sure that many amongst you
have also experienced the same, but today I am gonna explain it to the depth
with examples and I hope that it will help you to the core and here I go,
WHAT ARE
DEBIT AND CREDIT NOTES?
DEBIT NOTE – it is an instrument issued by the PURCHASER of
the goods to the seller of the goods indicating that he wishes to return the
goods purchased by him .
CREDIT NOTE- it is an instrument issued by the SELLER
indicating that goods returned by the purchaser has been received by him.
ACCOUNTING TREATMENT
:
In the books of purchaser-
- · When goods are purchased following entry is passed:
PURCHASE A/C DR.
TO CREDITOR A/C.
( Being goods
purchased)
- · When a purchaser wishes to return the goods, he issues a DEBIT NOTE and passes the following entry
CREDITOR A/C. DR.
TO PURCHASE
RETURN A/C.
(Being goods
returned)
In the books of seller:
- · When goods are sold
DEBTORS A/C. DR.
TO SALES A/C
(Being goods
sold)
- · When seller issues CREDIT NOTE to the purchaser indicating that goods returned by seller has been received by him and the purchaser doesn’t have to pay anything for the said described goods in the credit note.
SALES RETURN
A/C. DR.
TO DEBTOR A/C.
(Being goods
returned)
POINT TO BE REMEMBERED FOR BETTER UNDERSTANDING:
For remembering who
issues debit note and who issue credit note, just consider the DEBTOR AND
CREDITOR at the time of returning goods, if debtor is credited, it is a credit note
and if creditor is debited it is debit note.
IS IT NECESSARY THAT CR.AND DR. NOTES ARE ISSUED ONLY IN CASE OF RETURN OF GOODS?
The answer is NO,
In case either of the party is over or undercharged, DR. AND
CR. NOTES can be issued by them to settle the account.
Sample debit and credit notes:
FIG. DEBIT NOTE
FIG. CREDIT NOTE
POSTED BY,
VARUN MAHEY
EDITOR AT CHARTERED BLOOD
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