What transaction should you enter if a customer returns a damaged product?

Entering a Credit Memo is the appropriate action when a customer returns a damaged product because it effectively adjusts the customer's account balance. A Credit Memo serves to document the decrease in revenue that results from the return. It is a formal record that indicates the amount of money that should be credited back to the customer’s account, ensuring that their balance reflects the return accurately.

This action acknowledges the return of the product and represents a refund or a credit that can be applied to future purchases by the customer. In QuickBooks, this helps maintain accurate sales records and customer balances, providing transparency in financial reporting.

Different options represent various forms of transactions: a Debit Memo is typically used for recording adjustments that the company needs to make, a Customer Return might sound appropriate but is not the standard term used in QuickBooks, and a Check or Bill would represent outgoing cash or obligations, which do not apply directly to a return scenario. Using a Credit Memo specifically aligns with the standard accounting practices for handling return transactions involving customer sales.