Debit note and credit note-accounting treatment

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Querist : Anonymous (Querist)

25 November 2015 What is the difference between debit note and credit note with example.

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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25 November 2015 A debit note is sent to inform a party that their account has been debited in the books of the sender of the debit note. For example, delivery charges have been paid on behalf of a customer and are to be recovered from him then a debit note will be sent to the customer after passing the following entry for delivery charges:
Customer's a/c Dr.
To Cash/bank a/c

Similarly, a credit note is sent to to inform the party that their account has been credited in the books of the sender of the credit note. For example, a customer has been sold goods on credit amounting to Rs.50,000. Thereafter, the customer complains that the quality of the goods is not up to the mark. To keep the customer happy the seller may reduce the billed amount by Rs.2,000 for which a credit note will be sent to him to reduce the amount due from him to Rs.48,000.
Allowance a/c Dr. 2,000
To Customer's a/c 2,000