Debit and Credit Note in Accounts

Following my article on learning on basic of accounting, today we will learn what is debit note and what is a credit note

and how the same are dealt with in accounts ?

debit noteImage Credit

DEBIT NOTE

In accounts there were many instances when an Organization receive debit note or it has to issue a debit note to its suppliers, customers, employees, third party and so on.

when you receives a debit note, from a third party, you have to credit the account of the issuer of the note and debit the related expenses /item account.

suppose you have purchased  an item at  a rate of Rs.100 however by mistake your supplier had billed you at  a rate of Rs.95, then your supplier may issue a debit note for balance of Rs. 5 plus vat and other applicable duty. In such a case, you have to debit respective purchase and duty amount as narrated in the debit note and credit the supplier account.

Similarly if you have issued a debit note to your customer, you have to debit your customer’s account and credit the related account.

I am highlighting some major circumstances under which you may issue  or receive a Debit Note

1) Rate difference in sales/purchase invoice

2) Difference between billed and actual quantity of the invoice

3) Interest on late payment to and from suppliers/customers

4)Recovery interest or any amount from employees due to loss or damage to company’s     assets or any other cause.

5)Wrong credit or debit entry in the books of account of either party.

6) Quality difference

6) Any other circumstances which requires to issue a debit note

CREDITIT NOTE

In the same way, as explained above, circumstances may arise when an organisation may require to issue a credit note or receive a credit note.

In case of issue of Credit note to a third party, you have to credit supplier’s account and debit the related expenses head account.

Let’s assume, you have agreed to pay a purchase invoice within 1 month time to your suppliers however, you couldn’t manage to pay and your supplier agreed for a delayed payment at an interest rate of @2. p.m. for the same

Now, you have to issue a credit note to your supplier debiting interest account and crediting his account with the amount of interest.

One thing is very important to note, that you can not issue a debit or credit note to any government department, bank etc. It is applicable only for private organisation.

An employee can not issue a debit or credit note but you can do so.

In tally, Debit and credit notes are managed through Journal voucher entry.

I will post the same by writing an another article.

  • shakuntala aswaney

    thanks to your step by step TDS in Tally ERP now I can print the challan for
    pymt of TDS in Bank. Now please guide me to do VAT Returns in Tally ERP and also remote login i.e if I m at home then how do I view tally ERP on my Laptop as I have loaded it on my laptop but in the office as we have wirefree Im connected to the server but when Im at my Resi 20 kms away how do I view my Tally ERP ?

    • http://www.tallynine.com Mahendra

      OK Soon I will write about remote access to tally. you can view your data anywhere from the world.the only condition is both the computer must be connected through internet.
      For vat returns please refer my post about vat and excise in tally. if need more information please revert back.

  • Kavita Mosamkar

    Thanks a lot to Add your article of Credit & Debit note. Its a most of Important Notes in Tally.. Even im also confussed wheh we have to issue CR & DR ? But really you explain very very well. Thanks a lot. ..

    • http://www.tallynine.com Mahendra

      Thanks kavita for your input. you can contact me for any problem relating to tally, accountancy or legal commercial matter.

      • HIMANSHU SHARMA

        HELLO SIR…
        THIS IS HIMANSHU SHRAMA. I AM STUDENT AND WANT TO LEARN TALLY.. I KNOW THE BASICS OF TALLY, BUT FOR MY DETAILED KNOWLEDGE, I NEED SOME NOTES OF TALLY…
        PLEASE TELL ME SIR HOW CAN I GET TALLY NOTES.

      • rahul

        Sir i also want to know when we issue Dr or cr note to our vendors

  • sumeet

    jordaar…………wat an example………..thanx a lot………..!!

  • sibi

    I cant make debit note in tally erp 9 what to do ?
    is asking “”” Adjust Classification “others” doesnot exist!””” What is a solution ???please help //

    • HAMID MOHAMMAD

      please send solution of this problem to me

  • Monalisha

    Thanks for your valuable information about accounts(debit and credit note)
    You have explained clearly and it is very useful for me thanks once again

    • http://www.tallynine.com Mahendra

      Monalisa,
      Thanks for your input
      I am glad that you find it useful.

      • Nagappan

        Sir , i am using Tally.ERP.9 Release 1.1
        while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
        in F11 i have already given yes for debit notes and credit notes.
        Thank you sir

  • vijay

    hello sir,
    i need your help in optional voucher
    in journal entry , by mistake one voucher was enter in optional voucher,then few day after i saw the partys account, there are no transaction in his account i know the bill was enter becasue it is new party and its ledger is created but entry is not saw in account.so is the any configure are in tally for saw optional voucher.pls send feedback.

    few days ago my question for service tax is solved by you successfully.
    Thanks,

    • http://www.tallynine.com Mahendra

      Vijay,
      Optional vouchers can be seen by Display Exception reports
      Else you can also view it from Display statement of accounts, statsticks
      Next time, when you ask here, please do not forget to mention your Tally serial number else the query will not be attended

  • vijay

    Thanks a lot for help & next time i remember to mention tally serial number.

  • gopalkrishnan

    Sir,

    How to print Debit Note Voucher in bill format.

    • khalifat ur rahman

      how to print debit note voucher in bill format
      pls advise

  • suresh kumar

    Sir,
    Thanks for you to do our help in tally . Please always doing our help because We are a student of tally and gouide us when we are in wrong point in tally.

  • Manisha

    Sir,
    Can u please help me with the credit note.
    In tally i have recored the credit note ( at the sale price). But the closing rate of the item is showing differnce in the rate after the credit note. The rate is going high. we are currently maintaining average cost method in tally.

    • magi

      Hi….
      I’m Magi Student of CA Academy
      R u need credit note Information just see…

      A credit note is a monetary instrument issued by a seller that allows a buyer to purchase any item or service from that seller on a future date.

      Credit notes may be issued by a seller as a goodwill gesture to a buyer who wishes to return previously purchased merchandize (instead of cash repayment) in circumstances where the original sales agreement did not include an explicit refund policy for returned items. In such circumstances, a credit note of value equal to the price of the returned item is usually issued allowing the buyer to exchange his purchase for other items available with the seller.

      • http://www.tallynine.com Mahendra

        Hello Magi,
        Thank you very much for helping fellow readers.
        We highly appreciate it

  • Anitha

    Hello sir,

    I need of some Information on Tally

  • dilip

    hello sir
    i want Information about cash sales. which voucher is used

  • manoj

    sir, where to find a complete knowledge of tally 9. so that no queries left.

  • azhar

    thanks dear to solve my problem

  • Mirza Irfan Baing

    I want to know How to take out Trial Balance With Head of Accoutn With Lines

    Like This
    _____________________
    1)Cash A/c
    _____________________
    2)Bank A/c
    _____________________
    3)Expenses A/c
    _____________________

    Plz Inform Me…

  • Syd Masroor Rizvi

    HELLO SIR…
    This is Syd Masroor Rizvi. I am student and want to learn Tally, I need some notes of Tally .
    Pls reply as soon as Possible.

    Thanks

  • sekhar deb roy

    respected sir,
    I am sekhar from W.B. right naw i am working in pvt. ltd. company for jr. A/c , i want to need some important notes of tally pls repl as soon as possible.

  • priyanka

    Dear sir,
    I am working in construction company as Accountant.
    I am using Tally9.
    i have one doubt we will plan to anothr branch in MEP division what is the process of entries in head office & branch account entries uner ledger creations also plz give me sir reply.

    • http://www.tallynine.com Mahendra

      Priyanaka,

      All Accounting entries depends on the nature of transactions. Now a software can’t do a magic that can offer you ready made entries.
      You have to study the relationship of branches and HO. Otherwise, I am pretty sure in B. Com Accounting books there are plenty of examples of Branches/HO u have to use the same principles here in real life

  • vikash varnwal

    thanks for this.
    but i want to learn tally on our mobile . i want to learn tally and the entry on the tally software so plaese help to me .

  • Naveen

    We received credit note from our customer for purchase of goods from Austria, kindly intemate me how to pass entry in tally erp 9.

    Thanks

    Naveen

  • rajesh

    I cant make debit note in tally erp 9 what to do ?
    is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

  • Rajesh M. Jawade

    I cant make debit note or credit note entry in tally erp 9 what to do ?
    is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

  • Rajesh M. Jawade

    Tally erp 9.1.52 – Sr.No.77xxxxxxx
    Sorry for sending problem without sr.no.
    I can’t make debit note or credit note entry in tally erp 9 what to do ?
    Tally 9 is asking Adjust Classification “others” does not exist! What is a solution ?
    please help us & send reply.

    • http://www.tallynine.com Mahendra

      Rajesh,
      have you enabled Debit and Credit note option in your Tally.erp 9 ?
      if not then first of all go to F11, Inventory option and under invoicing set yes to debit and credit note
      then save the form

      regarding classification “others” can you explain me where are you facing the problem ?
      if you can send a screen shot of your problem with more specific details I will be able to help you with a precious solution

      • Nagappan

        Sir , i am using Tally.ERP.9 Release 1.1
        while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
        in F11 i have already given yes for debit notes and credit notes.
        Thank you sir

  • meera

    dear,

    what is type of company

  • Rajesh M. Jawade

    Dear Sir,
    Thanks for your quick reply.
    1.We have already taken yes option in F11 for D/Note & Credit Note.
    2.At the time of entry complete then the message shown by software as per given details.
    Adjustment classification does not exit.
    How to send a screen shot copy to you?
    please send your e-mail address or other option.
    please guide us.

    • http://www.tallynine.com Mahendra

      Hello Rajesh,
      I had sent you a personal mail to your mail id. you can respond me to that mail.
      Else, you can also fill out our Contact us page and can attach your screen shots there!
      Its safe and confidential.

  • keyuri

    HELLO SIR/MED.

    I CAN’T ENTER DUE DAYS OR CREDIT DAYS DURING ENTRY IN SALE VOUCHER . I CHOOSE AGN REF BUT AUTOMATICALY ENTER NEW REF.
    PLEASE SOLVE MY PROBLEM AS ERLY AS POSSSIBLE
    .

  • sujatha

    i have some doubt in tally for example some of the members are giving cash for interest in with group they should be for example salary means indirect expenses

  • Sonu

    Output cst, input cst, vat, custom duty, cess etc all comes under wht account in tally.
    Whether it comes under Duties& Taxes or Sales a/c or Purchase a/c
    Plz reply

  • viren9

    I have issue the Debit note of Rs. 13500/- they have deduct the TDS how i can enter the entry in TALLY 9

  • Kittu

    Dear sir,

    Recently,we gave 13000/-discount to customer against invoice value.and i make a credit note and sent to customer but in tally how can i enter and which account weather journal / credit account.Pleas reply me

  • chelladhadiya

    sir,
     
    i made one debit note to my supplier, then they raised credit note for that, how can i pass that entry in tally.

  • Ravishankar kumar

    iam working as an account. ihave one small doubt in tally 9

  • Ravishankar kumar

    howwe can calculate project cost in tally 9

  • Manjunath

    Hello Sir,
    If I purchase the cement on Credit base, directly from cement co. Pls tell what entry’s come? pls tell step by step. And pls send if u have any samples related to retail cement business. thakyou

    • POONAM DINKAR SHINDE

      FOR THIS CEMENT PURCHASE A/C IS TO BE CREATED UNDER PURCHASE GROUP AND COMPANYS A/C(NAME OF THE COMPANY ) TO BE CREATED UNDER SUNDRY CREDITORS GROUP
      PASS THE FOLLOWING ENTRY IN PURCHASE VOUCHER
      CEMENT PURCHASE A/C DR
      TO CEMENT CO ( NAME OF THE COM )

  • HITESH PATEL

    Dear Sir,
    In Tally erp-9 series A release 2.0 eddition gold ultimation
    Problem :- I can’t enter Details of Transport, L.R. No. & destination In Creation of sales return C.N. but in the sales return C.N. print priveiw is shown all of details that’s i was said above.(Details of Transport, L.R. No. & destination)
    Plese give me solution…urgenly. ( Thank you for your upcoming answer)

  • sunil.A

    Thank u Sir – I got Information About Dr & Cr

  • Onitolo K.A

    sir, i need a detailed note on tally. pls, reply as early as possible.

  • asmita

    hi sir i want a all journal entry and the entrys of tally 9

  • gagan deep

    DEAR SIR

    I WANT TO KNOW ABOUT CREDIT NOTE AND DEBIT NOTE ENTRIES IN TALLY.

  • Amit Sharma

    Hello sir,

    Myself amit, i want to know how can i create retail invoice in tally

  • Omprakash Ankam

    Why we update tax number on invoice ? why menditory to update it ? can you please guide me on compliance ?

    is it fine, if I sent invoice without tax number to buyer and sent it later via email or call?

    Omprakash.

  • V. RAJA

    Thanks sir, i got a clarification by your explaination. your explaination will be useful for me in my organaisation.

  • Somnath Dhole

    Dear Sir i was joined a manufacturing company from service sector handling total Accounts Receivable Process so, which kind of care i have to be taken and where to pay a attention Please replay me we are using Tally 9 and shifting in new integrated business solution soft as per our requirement.

    Thanks

  • Naresh Singh Bisht

    Dear Sir,
    m Naresh,
    i want to know how can i pay on line TDS, SERVICES TAX AND VAT, on ERP9

  • Nagappan

    dear sir, i am using tally erp9 and when going to credit note in invoice format it works up to accept y / n. when we press yes it says adjustment classification “others” does not exist.

    in sales invoice before narration it asks for “show statutory details”
    I do not want them. please do help me

  • Naveen

    Hi,

    How to pass the entry in tally for the same amount debit to party A/c and after two days same amount credited to same A/C..Please help me

    Naveen

  • Tinku sharma

    Sir please tell me what is the diff between tally 9.1 and previous versions

  • priya

    wonderful sir, it is too good n i apply it in my work thanks so much,
    but one more help i need sir ..when ever i use tally or any accounting software i feel so much confuse what i hve to fill like divion …….. unitcode….. sub ledger ……… yes /no cost centre so what should i do?

  • VIJAY

    Sir , i am using Tally.ERP.9 Release 1.1
    while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
    in F11 i have already given yes for debit notes and credit notes.
    Thank you sir

Optimization WordPress Plugins & Solutions by W3 EDGE