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Troubleshooting

Recording a Returned Item on Which Sales Tax Has Been Charged

My customer returned an item and I charged sales tax on the item. How do I account for this?

When an item is returned, create a Credit Memo for the item. The Credit Memo will reflect the sales tax (make sure the amount agrees with the original invoice). This sales tax credit will flow through your sales tax liability account in the current month and will be netted against the sales tax you owe for the month.


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