< b="" />Journal Entry for Credit Note Issued< />
< b="" />Explanation:< />
< b="" />1. Credit Note Issued< />
- A credit note is issued when goods are returned by a customer or in this case, packing cases are returned by Suresh.
- The credit note issued by Aman is for rs.180 in respect of the packing cases returned.
< b="" />2. Debit and Credit Accounts< />
- The journal entry for issuing a credit note involves debiting the Sales Returns account and crediting the Suresh's account.
- Sales Returns account is debited to record the decrease in sales due to the return of goods.
- Suresh's account is credited to reflect the liability towards Suresh for the amount of rs.180.
< b="" />3. Amount of Credit Note< />
- The amount of the credit note is rs.180 which represents the value of the packing cases returned by Suresh.
< b="" />4. Impact on Financial Statements< />
- Issuing a credit note affects the income statement by reducing the revenue and the balance sheet by reducing the accounts receivable.
< b="" />5. Journal Entry< />
- The journal entry for this transaction would be:
- Sales Returns Account Dr. rs.180
- Suresh's Account Cr. rs.180
By following the above journal entry, the transaction of issuing a credit note for packing cases returned by Suresh can be accurately recorded in the books of accounts.