If a credit memo is issued to a customer, which journal is used?

When a credit memo is issued to a customer, it typically indicates that a reduction in the amount owed by the customer is being recorded, often due to returns, allowances, or discrepancies in order fulfillment. The proper journal for recording a credit memo is the General Journal.

The General Journal is used for transactions that do not fit into special journal categories like cash payments or sales. This includes adjustments such as credit memos which can affect various accounts. In this case, it might involve debiting the Accounts Receivable account to reflect that the customer owes less and crediting the appropriate Sales or Revenue account to acknowledge that sales income has decreased.

Other journals, like the Cash Payments journal, would primarily track cash outflows, and the Purchases journal would monitor the acquisition of goods or services on a credit basis. The Sales journal is specifically used for recording sales transactions, particularly sales made on credit, but does not accommodate adjustments such as credit memos.

Hence, the General Journal is the correct choice for documenting the issuance of a credit memo, as it provides the flexibility necessary for recording unique or varied transactions that impact multiple accounts.