If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

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When merchandise sold on account is returned to the seller, the seller issues a credit memo to inform the customer of the details of the return. This document will decrease the customer's accounts payable balance and increase the seller's sales returns and allowances account. A sales invoice is used when merchandise is sold and a purchase invoice is received by the buyer from the seller for purchases made on account. A debit memo is usually used to inform a customer of an increase in their accounts payable balance.

If Merchandise Sold on Account Is Returned to the Seller