Here, the sales revenue account has been debited, and the accounts receivable have been credited with the difference amount.įor better understanding, we have created an example:Ĭontractor A sold goods or services at $500 to company B, which actually costs $300. If the contractor mistakenly charges a higher price than what is fixed, it can issue a credit memo stating overstatement as a reason. So here are the three main reasons for sales return and issuing a credit memorandum. Recording transactions for financial records is a must not only for future references but also for taxation purposes. Journal Entries for Certain Transactionsīusinesses have several transactions, out of which, sales returns are one of them, which happens due to several reasons. Without beating around the bush, let’s quickly know the entries to record in the books of accounts.
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