Nancy Chawla In: Category - ExpenseIs sales return a debit or credit?debit or creditsales return ShareFacebook1 AnswerVotedRecent Palak 2020-08-12T16:06:03+05:30Added an answer on August 12, 2020 at 4:06 pm This answer was edited. Sales return is debited in the books of accounts. It is a contra revenue account.To make the concept simpler, I would like to introduce you to the Modern rule of accounting, which is designed to explain the debit and credit relationship.Rule of accountingModern rulesThe modern rule is as followsType of accountDebitCreditRevenue accountDecreaseIncreaseWhen a sale is made it is credited in the books of account as it leads to an increase in the revenue, however, when the goods are returned by the customer it has a debit effect because it leads to a decrease in the revenue.According to the modern rule of accounting, the sales return account has been debited because it leads to a fall in the revenue of the business. In case the sales were made on a credit basis the expected accounts receivable should be credited by the amount of sales returned as no amount shall be received. However, if the sales were made on a cash basis then an accounts payable should be issued to acknowledge the liability of repaying the customer for the purchase.Example:The credit sales of 1,00,000 were returned by Mr. K to ABC Ltd. as the goods were defective. The journal entry in the books of ABC Ltd. is as followsSales return a/cDebit1,00,000Debit the decrease in revenueTo Mr. K’s a/cCredit1,00,000Credit the decrease in asset(being goods returned by the customer)Hope this helps.0Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerCancel replyYou must login to add an answer. Username or email* Password* Captcha* Click on image to update the captcha. Remember Me! Forgot Password?