What document is prepared by the vendor showing the amount deducted for returns and allowances?

The correct document prepared by the vendor that shows the amount deducted for returns and allowances is the credit memorandum. A credit memorandum serves as a formal acknowledgment from the vendor to the buyer that a specific amount has been credited to the buyer's account, typically due to returned merchandise or allowances granted for defective products.

The credit memorandum reflects the adjustments in the seller's records and communicates to the buyer the reduction in their outstanding balance. This document is essential for both parties as it provides a clear record of the transaction and the reasons for any financial adjustments made.

In contrast, other documents serve different purposes: a sales receipt is evidence of a sale and the total amount due at the point of sale; an invoice is a request for payment detailing the goods or services provided along with the amount owed; and an adjustment note, while it could be relevant to changes in transaction details, is not the standard term used for the specific documentation of credits for returns and allowances. Thus, the credit memorandum is the most accurate choice in this context.