The Source Document For Journalizing Sales Returns And Allowances Is What?

Source Documents Used To Record Sales Returns And Sales Allowances Transactions

The Source Document used for Journalizing Sales Returns and Sales Allowances is Credit Memorandum.

Actually, when goods sold to customers but goods are returned from customers to sellers / vendors due to damaged goods or major defects found on goods or customers retain the goods at the lower price than the original price due to minor defects on it, then a seller issued a credit memorandum, containing item details, price lists, amount of goods deducted, etc., to buyers informed him that he granted him Sales Returns or Sales Allowances on goods sold, whichever is the case.

The original copy of credit memorandum is sent to the customers / buyers and the copy of credit memorandum is used by the seller as a source document for recording sales returns and sales allowances in General Journal.

So, in this way the seller, supplier or vendor used credit memorandum as a source document for journalizing sales returns and sales allowances in general journal.