Hi,
I have too many question
assuming that
Purchases are recorded when the company receives the goods and sales are recognized when the goods sold are delivered to the customers.

1. If a customer returned a product and we issued a credit note for the amount that product worths. How do we journalize this? I know it should be in General journal but what will be the accounts which are affected?
the question was
on 13 may customer A returned $800 worth of product. Issued a credit note for 800.

2. what do we do if we returned a product and received credit note?

3.what do we do if we received a sales order to deliver product X to customer B for $500 on13th of may. It doesn't involve any cash or inventory so does it go to the general journal/?
is this revenue received in advanced or account receivable?

4. and what do we do when we delivered the product X to the customer B on 23rd?

5. what is going to be journal entry for customer B when they order the product is this Cash payment journal? where do we post it in ledger?

6. what about when they receive the order?

thanks

delite

i think to simplfy the process, you should reverse entires for sales and/or purchase returns. this is done by journal entires.naturally gross profit orignially booked is also reversed by nature of the journal entries.

safat

thanks

CaptainForest

1)
Dr. Sales Returns and Allowances 800
Cr. Accounts Payable – Credit Note to customer 800

2)
Dr. Accounts Receivable
Cr. Purchase Returns and Allowances

3)
Since have received NO Cash, and you don’t record Sales until you deliver the goods, no JE is needed.

4)
Dr. Accounts Receivable – Customer B 500
Cr. Sales 500

5)
Assuming Customer B has the same policies we do in that they don’t record purchases until the goods are received….Then no JE is needed when they place the order.

6)
When they receive the order.
Dr. Purchases
Cr. Accounts Payable