Goods return from debtors come in which account debit or credit
When goods are returned by debtors, it affects both the debtor's account and the sales account. To determine whether to debit or credit these accounts, we need to consider the accounting concept of double-entry bookkeeping.
1. Debtor's Account: Debtor's account is typically classified as an asset account, representing the amount owed to the company by the debtor. If goods are returned by a debtor, it reduces the amount owed. To decrease the debtor's account balance, we need to credit the account.
2. Sales Account: Sales account is usually classified as an income or revenue account, representing the revenue generated from the sale of goods. When goods are returned, the revenue from the original sale is reduced. To decrease the sales account balance, we need to debit the account.
In summary:
- Debit the Sales account to decrease the revenue from the original sale.
- Credit the Debtor's account to decrease the amount owed by the debtor.
This way, you can record the return of goods from debtors appropriately in your accounting system. It is important to note that depending on the specific circumstances and accounting policies of your organization, there might be variations in the account titles or practices used.