AR DEBIT – CREDIT MEMO ADJUSTMENTS :
If an adjustment has anything to do with a return of inventory, the credit memo should be made in Order Processing (Module 6), Order Entry & Editing (Task 1).
If an adjustment has anything to do with an over charge on an item, a credit memo can be made in Order Processing (Module 6), Order Entry & Editing (Task 1), to credit back the whole amount of the invoice of the over charge. A new invoice may then be created for the correct amount.
A/R adjustments are entered into Sales Entry and Editing (Task 1 in AR). This procedure will adjust both AR and the General Ledger after everything is posted and the month is closed.
There are many reasons an A/R adjustment may be needed:
· Write off an over payment on a customer’s account.
o In this case a debit memo is entered for the amount of the over payment.
· Write off an under payment on a customer’s account.
o In this case a credit memo is entered for the amount of the under payment.
· Customer has more than one A/R account. They want to use a credit memo from account A on account B.
o In this case a debit memo is entered into account A & credit memo in account B
- Accounts Receivable (Module 2)
- Sales Entry & Editing (Task 1)
- Enter New Sales Record (Sub-task 1)
The important/necessary fields are listed below, in bold. with the number of characters in parenthesis.
01. Invoice # :_____ (6 ) Numeric. Assign an invoice number that is out of the range of the system generated invoice or CM numbers.
02. Inv date : ______(6) Enter a date in the current month
03. Due date:
04. Division #: __( 2)
05. Sale type : _(1) Use transaction type of "3" - credit memo OR “5” – debit memo
The system will prompt: “Check for duplicate credit memo or debit memo? ”.
06. Customer # :______ (6 )
07. Salesman # :
08. Sale amt:
09. Other amt : _______(8) Enter the taxable and non-taxable sales amount plus freight amounts, of the adjustment in this field. Only include state or zone tax in this field if you aren’t going to get back the tax. If the state or zone tax is included in this field don’t include it in any other field.
10. State tax: _______ _( 8) Enter the sales tax amount if applicable. If this is a credit memo and you want credit for the state tax enter it in this field instead of field 09 Other amt.
11. Non-tax amt : _______(8) Enter the non-taxable sales amount in this field.
12. Freight amt.
15. Apply to : ______(6)
- If entering a credit memo:
- IF the credit memo is to be applied to ONLY ONE invoice, enter the invoice # here. If the "credit" is to be applied to several invoices, leave this field "0" and apply the newly created credit memo to the invoices through Cash Receipts Entry & Editing (Task 2), entering the new Credit Memo number being created in this step into field 11 and the invoices being written off on the second screen (Note: there will be a system generated debit memo and credit memo automatically created, which will be cleared off the customer’s account when the program: “Clear Paid Inv.'s from A/R Open” is ran at month-end). If the invoice number entered is not an open invoice, the following message appears: Apply-to NOT in open file, credit will NOT show on account.
16. St Tax flag. _( 1) Enter a nontaxable tax flag from the pop up table.
20. Department : __(2)
21. Tax zone A :____ (4 ) If you have a Tax zone for non-taxable sales, type it in here. If this is a credit memo and you are going to get the zone tax back, enter the zone #.
22. zone A $ :0 If this is a credit memo and you are going to get zone tax back, enter the amount here.
23. Tax zone B.
24. zone B $.
25. Tax zone C.
26. zone C $.
27. Tax state:
28. P/O #: This is a 20 character alphanumeric notation. Type an abbreviation for your records, example: “SHORT PAY-CHK #1234”
Enter A General Ledger account #. You may use a Bad Debt G/L account. You may have an A/R or A/P Clearing account, or a specific account just for A/R adjustments. DO NOT use the Accounts Receivable or Accounts Payable G/L accounts.
Note: if amounts were entered in fields 10 (State Tax), 12 (Freight Amt), or in the Zone Tax fields #21 through 26, the amounts will not appear on the second screen for distribution, only the actual sales or other amounts will appear….this is the amount that will be written off to the G/L account #, whereas the sales tax & freight will be taken care of automatically.
Example: A customer has under paid invoice #778899 by $1.00 on check #1234 and it is still on the customer’s account and you want to clean up the account and remove the $1.00. A credit memo is entered for $1.00.
01. Invoice #. 123456
02. Inv date :06 /01/xx
03. Due date :06 /01/xx
05. Sale type. 3
The system will ask, “Check for duplicate credit memo or debit memo? ”.