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Credit note bill format for Communications & Media

in this topic you're going to learn what is debit note or credit note when debit or credit note is issued who issues debit and credit note debit or credit note explanation sample credit memo debit memo today we are going to understand about credit debit memos we all know debit and credit as they are the fundamentals of bookkeeping and accounting in case of any change in a transaction adjustment entry needs to be passed for example a supplier has already raised an invoice to the buyer against the goods delivered but there are some deductions or returns that supplier has to take back and accept for this supplier creates a document called as credit note to adjust the amount receivable as per original invoice accounting entry for sales in the books of vendor will be abc limited account debit to sales account rupees 10 lakh accounting entry or credit note entry for sales return in the books of vendor will be sales return account debit to abc limited account rupees 50 000. now let's take one more example of credit or debit memo in case of corporate company let's understand with an example bmc limited issued a purchase order with 20 quantities at the rate of rupees 3000 with total po value of rupees 60 000 to slk private limited then slk private limited delivered goods as per purchase order after the delivery of goods slk private limited issued the invoice to bmc limited now let's see how will it reflect in books in the books of bmc limited account of slk private limited is credited upon the receipt of invoice in the books of slk private limited account of bmc limited is debited for issue of invoice after examining the quality of the materials received bmc limited returned material quantity 3 back to slk private limited upon returning the material bmc limited will request slk private limited to issue a credit note for material return that is three multiply by rupees three thousand which equals to rupees nine thousand slk private limited will send credit note with details such as quantity rate and total amount as mentioned above based on credit note received from slk private limited entry will be made in the books of bmc limited this is done to reverse the number of materials returned by bmc limited to slk private limited now let's look at the example once again in one flow bmc limited issued a purchase order with 20 quantities at the rate of rupees 3000 with total po value of 60 000 to slk private limited then slk private limited delivered goods as per purchase order after the delivery of goods slk private limited issued the invoice to bmc limited in the books of slk private limited account of bmc limited is debited for issue of invoice in the books of bmc limited account of slk private limited is credited upon the receipt of invoice after examining the quality of the materials received bmc limited returned material quantity 3 back to slk private limited upon returning the material account of bmc limited will be credited with the amount of material returned that is three quantity into rupees 3000 per quantity equals rupees 9000. slk private limited will send credit note with details such as quantity rate and total amount as mentioned above based on credit note received from slk private limited an entry is posted in the books of bmc limited this is done to reverse the number of materials returned by bmc limited to slk private limited now let's look at some additional points in case of credit memo who issues credit memo credit memo is a document issued by the seller of the goods or services to the buyer in our earlier example bmc private limited returned the material to slk private limited hence slk to issue a credit note for equivalent amount what are the reasons for issuing credit memo buyer has returned the goods back to the seller hence seller reverses the sales entry in his books by crediting the customer account hence the document is called as credit memo quantity dispute there might be a difference in quantity as per buyer and quantity as per the seller credit note is issued by the vendor if quantity invoiced is more than actual quantity received by buyer other reasons includes that a buyer may not be in a capacity to make the payment in such situation credit memo is classified as internal credit memo which is entered into the books to write off accounts receivable balance such internal credit memo is not sent to the buyer this is a credit memo issued by the seller and sent to the buyer key fields of the credit memo are as follows vendor details on the credit memo consists of vendor name address for correspondence correct gstin along with state in which the business place of the vendor is located then customer details such as customer name address for correspondence gstin of the customer are also mentioned on the credit memo gstin of the customer or buyer and gstion of the seller or vendor should be correctly mentioned on the credit note this is important for reversal of gst liability in case of goods return or the amount of purchase return under such credit note after vendor and customer details credit note details such as credit note number and date relevant invoice number and date are also mentioned relevant invoice number of the given credit note is important to identify issuance of credit notice done against correctly relevant invoice details of material return include material name hsn code quantity and rate of material material description and hsn code should match with invoice and goods receipt note to avoid mismatch between purchases and respective purchase returns gst details such as rate and amount of gst etc amount details like taxable amount gst amount total amount including tax now let's look at sample copy of debit memo now let's look at some additional points in case of debit memo can customer issue debit memo debit memo is issued by customer or purchasers while reversing the purchase entry by debiting vendor account hence the document is called as debit memo what are the reasons for issuing debit memo material rejection by the buyer due to material quality being different as mentioned in purchase order reduction in charges like tax freight carriage invoice overcharge refers to invoice amount being greater than amount of goods received by the buyer discounts being offered after issue of invoice also cause issue of debit memo can supplier issue a debit memo yes supplier can also issue debit memo or note what are the reasons for issuing debit memo rate charged in original invoice is less than agreed in purchase order in this case debit memo will be issued by supplier for the incremental amount if a customer misses the deadline for an early payment discount and deducts the discount anyway the seller may issue a debit note for the discount amount if the seller prepaid freight charges for the customer the seller may issue a debit note for those freight charges basically a debit note issued by supplier increases the amount of money the seller expects to receive from the customer the supplier increases his accounts receivable for the amount of the debit note issued this is an example of debit memo in this case key fields such as vendor details customer details and details of material returned is similar as we have seen in the sample of credit memo debit note has reference to original invoice number and date debit note issued by supplier is similar to any other invoice there is no difference except debit note is mentioned on the face of the format all other tax calculations will remain same hope by now you know what are credit memos and debit memos and why are they issued if you have any doubts please do not hesitate to contact the designated support team thank you keep learning