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Dear John,
Could you please Explain the logic behind the debit and credit entry of receiving credit note from supplier and sending it to customer.
Thank you.A credit note is simply a negative invoice (maybe, for example, a customer returned goods and therefore owes us less month).
When we send an invoice to a customer, the entry is Dr Receivables Cr Sales.
If we then send a credit note then it is Dr Sales Cr Receivables.Dear John,
In your lectures you told that when we pay cash it is credit and on receiving it is debit. I would like to know that kind of logic behind entries for credit notes e.g why entry is Dr receivable on sending invoice.
Thank youWe debit receivables when we send an invoice because the customer owes us more.
When we receive cash from the customer, we debit cash and credit receivables (because the customer then owes less)
Because a credit note is like a negative invoice, we credit receivables because they owe less.
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