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Debit Note

A Debit Note is a document sent by a buyer to the Supplier notifying that a debit has been recorded against the goods returned to the Supplier.

A Debit Note is issued for the value of the goods returned. In some cases, sellers are seen sending Debit Notes which should be treated as like another invoice.

A Debit is for your record of the debit against the Items your return.

1. How to create Debit Note

The user can make a Debit Note against the Purchase Invoice or they can directly make Debit Note from the Purchase Invoice without reference.

  1. Go to the respective Purchase Invoice and click on Create > Return / Debit Note
  1. The Supplier and Item details will be fetched as set in the Purchase Invoice.
  2. If you had paid partially or fully, make a Payment Entry against the original Purchase Invoice.
  3. Save and Submit. 

The other steps are similar to a Purchase Invoice.

1.1 How does Debit Note affect ledger

Once a Payment Entry is created against the original Purchase Invoice, the amount will be added to the Supplier’s account in negative so that the next time you make a purchase, this amount will be adjusted.

This is how the ledger is affected after a payment entry against a returned invoice: 

1.2 No payment was made against Sales Invoice

In case no payment was made against the original invoice, you could just cancel the Sales Invoice. But, if only 5 out of 10 Items are being returned from an invoice, creating a Debit Note is useful for updating the ledger.

2. Example

From Supplier Blue Mills, you had purchased Cotton worth Rs 2400 + taxes and at the time of delivery, you found that the products were damaged. Now you returned the product a Debit Note will be issued.

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