In this case, the company ABC can make the journal entry for the debit note of $1,000 goods returned as below: Account Debit Credit Accounts payable 1,000 Inventory 1,000 The company ABC uses the perpetual inventory system to account for all inventory-related transactions. Account Debit Credit Accounts payable 000 Purchase returns and allowances 000 Debit note exampleįor example, on June 01, the company ABC issues a debit note to its supplier to return the $1,000 goods that it purchased on credit previously.
On the other hand, if the company uses the periodic inventory system, the debit note journal entry for returning goods back to the supplier will be as below instead. In this journal entry, both liability (accounts payable) and asset (inventory) decrease in the same amount. Account Debit Credit Accounts payable 000 Inventory 000 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. In this case, the balance of the company’s bank account will decrease by the charged amount. For example, the bank may issue the debit note to charge against the company’s account as the fee of handling the NSF check. Sometimes, the bank also uses the debit note to decrease the balance of the company’s bank account.
In this case, it needs to make a debit note journal entry to reflect the amount that should be debited in the company’s account. The company may need to issue the debit note to its supplier when it needs to return the purchased goods for some reason.
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