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Credit Memos: A Guide to Issuing & Using Them Effectively

credit memo example

Another type of credit memo, or credit memorandum, is issued by a bank when it increases a depositor’s checking account for a certain transaction. The same as the sales returns and allowances account, the discount allowed account is also a contra account to sales revenue. Hence, this journal entry will also result of reducing the net sales revenue and total assets of the company. In a refund, you can get the cash from the products that you have returned. But in a credit memo, you can use the remaining amount to buy other products in the same store or supplier.