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Sales Returns Book

The Sales returns book is a subsidiary book which

  • records return of goods sold on credit
  • does not record return of goods sold on cash
  • does not record return of any asset sold

The entries in the sales returns book are made on the basis of credit notes issued to the customers or debit notes received from the customers. Periodically, the total of Sales returns book is transferred to the Sales returns account.

Credit Note

A credit note is a note sent by one party to another on crediting the account. The credit note may be required due to calculation mistakes in the invoice or problem with the goods supplied. The party who sends it becomes a debtor and the party to whom it is sent becomes the creditor. In other words, credit note is sent when one party credits in their books of account the other party’s account.


Following are the instances when debit or credit note is sent:-

Credit Note


Buyer to Seller

Seller to Buyer

When buyer has been undercharged

On receipt of goods returned by the buyer

  When seller has overcharged the buyer

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