Issued an adjustment(credit) note to hand Ltd for defective goods sold on 25 June, $125

Dr sales
CR Accounts receivable

Your Debit will be to Sales Returns and Allowances

You will also have one more journal entry to record on the sales return. You will need the cost of inventory being returned.

Debit Inventory
Credit Cost of Goods Sold

Your Debit will be to Sales Returns and Allowances

You will also have one more journal entry to record on the sales return. You will need the cost of inventory being returned.

Debit Inventory
Credit Cost of Goods Sold

Thanks! Could you help me with this transation: received an ajustment (credit) note from Love Ltd for inventory returned, $120

IS IT DR Sales returns and allowance
CR Accounts receivable

Your question has been answered in my previous post.

You are correct.