20 September 2012
Hello, Credit note is generally issues in following cases: (1) an invoice amount is overstated, (2) correct discount rate is not applied, (3) goods spoil within guaranty period, or (4) they do not meet the buyer's specifications and are returned. Also called credit memo and u can apply it vice versa for debit note.Accounting entry will be : IN THE BOOKS OF SELLER :- debit note :- by party a/c debit ----xxx to sales a/c--------------xxx to vat a/c---------------xxx
credit note:- BY SALES A/C debit -----XXX BY VAT A/C DEBIT -----XXX TO PARTY A/C CR--------------XXX in the books of purchaser the journal entry opposite
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