The company can make the debit note journal entry when it returns the goods back to the supplier by debiting the accounts payable and crediting the inventory account if it uses the perpetual inventory system.
| Account | Debit | Credit |
|---|---|---|
| Accounts payable | 000 | |
| Inventory | 000 |
In this journal entry, both liability (accounts payable) and asset (inventory) decrease in the same amount.
the journal entry you will make is a debit to the supplier's account, which reduces your liability. Then you credit the purchase return account, which decreases the expense.
debit sales return account and credit party account
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