When the account of any party is to be debited and no cash memo or invoice can be raised for such transactions, then debit note is issued. Therefore, the Debit note is a document which shows the reason of debit entry. Debit notes are issued due to following reasons:-

  • When the material is returned by the purchaser to the supplier then the debit note is issued by the purchaser to the supplier.
  • Debit note can be issued by the firm for the transactions not relating to purchase return also. For example:- the interest charged by business firm for late payments and commission receivable etc.
  • Debit note can be issued in response to credit note received by the business firm.
  • Debit note can be issued to the customer or supplier also if there is a mistake in sales invoice or purchase invoice.
  • Some time for certain adjustments or transactions for which bill can note be issued in that case debit not is issued by the firm.  issued.

The debit note contains the following particular:-

  1. Date of debit note.
  2. Serial number of debit note.
  3. Particulars or brief description of the transaction.
  4. If the debit note relates to the material return then the detail of item returned, quantity, rate, sales tax and reference of invoice against which the material was purchased, should be shown.
  5. Amount of debit note should be shown both in words and figures.
  6. Signature of the concerned authorities for raising the debit notes.

Points to be Kept in Mind for Preparation of Debit Note

While preparation of debit note. accountant should keep the following points in his mind:-

  • There should be some authenticate proof to prepare the debit note.
  • Debit note should be raised in reasonable time otherwise, some time it will not have any value for some transactions. For example:  to adjust the sales tax amount against material returned, debit notes must be raised in time otherwise one can loose the benefit of sales tax adjustments for material returned.
  • It must be singed by the accountant and by authorized person.

Illustration- 1(Debit Note for Return of Material to Suppliers)

M/s XYZ Limited, Delhi on 25.08.15 returned material to M/s Gift House, Delhi as per details given below:-

Cost of Material Rs.6000/=(Local Sale Taxable 5%.)

Local Sales Tax 5% Rs.300/=

Total amount Rs.6300/=

What document for above transaction shall be prepared by M/s XYZ Limited?

Solution:

Since the material is being returned by M/s XYZ Limited, therefore, the Debit Note shall be issued by them to M/s Gift House under:-

M/S XYZ LIMITED

DEBIT NOTE

Debit NoteNo.26                                                                                 Date: 25.08.15
To,M/s Gift House,New Delhi
We have debited your account with Rs.6300/= (Rupees Six Thousand Three Hundred only) on account of material returned to you as per the details given below:-

Particulars

Amount

In Rs.

Cost of Goods

6000/=

Add: Local Sales Tax 5%

300/=

Total

6300/=

Amount in words: Rupees Six Thousand Three Hundred only.
                        Manager                                                Accountant

Illustration-2

(Debit Note for Amount of Interest Receivable from Suppliers on Deposits)

M/s XYZ Limited  had deposited Rs.100000/= as security deposit on 01.07.14 with M/s Gift House and an interest 10% per annum was supposed to be credited by M/s Gift House.

What document shall be prepared by M/s XYZ Limited on 30.6.15 for above transaction?

Solution:

The interest amount shall be Rs.10000/= i.e. 10% on Rs.100000/=

The interest is to be credited in account of M/s XYZ Limited by M/s Gift House.. Therefore, Debit Note shall be prepared by M/s XYZ Limited as under:-

M/S XYZ LIMITED

DEBIT NOTE

Credit Note No. 18                                                                                   Date: 30.06.15
To,M/s Gift House,New Delhi
We have Debited your account with Rs.10000/= (Rupees Ten Thousand only) as per the details given below:-

Particulars

Amount

In Rs.

Interest amount on  security deposit amount for Rs.100000/=  10% per annum. from 01.07.14 to 30.06.15.

10000/=

Total

10000/=

Amount in words: Rupees Ten Thousand only.
Manager                                                Accountant

Illustration-3

(Debit Note for Commission Receivable)

M/s XYZ Limited Debited the account of M/s Gift House, New Delhi with Rs.7500/= on 25.08.15 towards the commission receivable in respect of target of sales achieved during financial year 2014-15 by M/s XYZ Limited.

What document shall be prepared by M/s XYZ Limited?

Solution:

For the above transaction, Debit Note shall be prepared as under:-

M/S XYZ LIMITED

DEBIT NOTE

Debit Note No. 27                                                                                     Date: 25.08.15
To,M/s Gift House,New Delhi
We have debited your account with Rs.7500/= (Rupees Seven Thousand Five Hundred only) as per the details given below:-

Particulars

Amount

In Rs.

Commission receivable on account of achievement of target of sales during financial year 2014-15.

7500/=

Total

7500/=

Amount in words: Rupees Seven Thousand five Hundred only.
Manager                                                Accountant

Illustration-4

(Debit Note for Adjustments in Account)

M/s XYZ Limited debited the account of M/s Gift House, New Delhi with Rs.20000/= on 25.08.15 towards the cheque No. 456788 dated 25.08.15 drawn on State bank of India, issued to M/s Morning Place on behalf of M/s Gift House.

Which document shall be prepared  M/s XYZ Limited  for above transaction?

Solution:

For the above transaction, Debit Note shall be prepared as under:-

M/S XYZ LIMITED

DEBIT NOTE

Debit Note No. 28                                                                                   Date: 25.08.15
To,M/s Gift House,New Delhi
We have debited your account with Rs.20000/= (Rupees Twenty Thousand only) as per the details given below:-

Particulars

Amount

In Rs.

Cheque No. 456788 dated 25.08.15 drawn on State Bank of India, issued to M/s Morning Place, on your behalf.

20000/=

Total

20000/=

Amount in words: Rupees Twenty Thousand only.
Manager                                                Accountant


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