animation: using credit and debit memos in accounts...

Invoice Adjustments Within the Accounts

Receivable Module – Topic 1

Monday, May 23, 2011

Animation: Using Credit and Debit Memos in Accounts Receivable

iCBT045-T1S1.swf

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Credit and Debit Memos

Referencing memo Affects the selected invoice directly

Independent memo Posts separately to customer’s account

Must choose to apply it

A/R Before Credit Memo: A/R Before Credit Memo:

Invoice # Amount Remaining Invoice# Amount Remaining

1001034 125.00 1001034 125.00 1001265 300.00 1001265 300.00 1001315 250.00 1001315 250.00

Credit memo for $25.00 created referencing invoice #1001034

Credit memo created as an independent memo

A/R After Credit Memo: A/R After Credit Memo:

Invoice # Amount Remaining Invoice# Amount Remaining

1001034 100.00 1001034 125.00 1001265 300.00 1001265 300.00 1001315 250.00 1001315 250.00

1001349 -25.00

Teacher Narration:

The Credit/Debit Memo Entry window is used to either decrease or increase the amount on an individual invoice or in a customer’s account.

To apply a credit or debit directly to an individual invoice, you need to create a referencing memo. It is called a referencing memo because it directly affects one specific invoice that you select. For example, a particular customer has three open invoices in Accounts Receivable. The first invoice, number 1001034, is eligible for a rebate incentive of 25 dollars. A credit memo is created for 25 dollars to account for the rebate, referencing invoice 100 1034. Because the credit memo is directly linked to the invoice, the amount remaining on that invoice decreased from 125 dollars to 100 dollars.

On the other hand, if the credit or debit memo is not linked to a specific invoice, or if you choose to not link it to a specific memo, it is considered an independent memo. An independent memo posts separately to a customer’s account, and you must choose when to apply it.

Using the same scenario, a customer has three open invoices in A/R, with the first one eligible for a 25 dollar rebate. However, in this instance, the credit will be placed on the customer’s account so that the customer can choose how and when they would like the credit applied. The credit memo for 25 dollars is created as an independent memo. Because of this, a 25 dollar credit invoice is now added to the customer’s open A/R. Remember -- in order for the customer to use this credit, it must be manually applied.




iCBT045-T1S2.swf

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Adjustment Types

Adjustment types Affect on invoice/account

Examples of when to use

Debit memo Increase Add freight to an invoice Add a handling or labor charge to an invoice

Credit memo Decrease Give a rebate incentive Correct a failure to invoice contract price

Bad debt write-off Decrease Remove unrecoverable invoices Bad debt recovery Increase Reinstate a previously written-off invoice

Sales tax adjustment Increase or Decrease (must reference an invoice)

Adjust a tax exempt item accidentally taxed Adjust an item taxed in wrong jurisdiction

Teacher Narration:

When using Credit/Debit Memo Entry, there are five adjustment types to choose from: debit memo, credit memo, bad debt write-off, bad debt recovery, and sales tax adjustment. Lets talk about how each type of adjustment affects an individual invoice or customer account, and look at a few examples of when to use these different types of adjustments.

Debit memos increase an invoice or customer account. They can be used to add a freight charge to an invoice if it was not added during shipping. In the same manner, debit memos can be used to add a handling charge or a labor charge.

Credit memos on the other hand decrease an invoice or customer account. They can be used to give a rebate incentive, or to correct a pricing error where a contract price was not used.

Bad debt write-offs decrease an invoice or customer account. In this case, the name says it all - bad debt write-offs are used to write off bad debt, which is an invoice you deem unrecoverable.

Bad debt recovery on the other hand increases an invoice or customer account. This adjustment type is used to reinstate a previously written-off invoice.

Finally, sales tax adjustments will either increase or decrease an invoice depending on the nature of the adjustment. Take note that a sales tax adjustment must reference a particular invoice. These adjustments can be used when a tax exempt item is accidentally charged tax, and when an item is taxed in the wrong jurisdiction.

It is important to note that none of the adjustments affect inventory. Also, remember that credits for returned material need to be processed through RMA Entry. When the RMA is invoiced, a credit will be automatically generated in Receivables.




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Slide 1 - i--Click the Accounting band

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Click the Accounting band.




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Slide 2 - i--Double-click the Transaction folder

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Double-click the Transaction folder.




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Slide 3 - i--Double-click the Credit/Debit Memos option

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Double-click the Credit/Debit Memos option.




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Slide 4 - i--Click in the Ship to ID field

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Click in the Ship To ID field.

The Reference Number holds the invoice number you want to reference. This field is only used for Referencing Memos. For Independent Memos, leave this field blank.

Credit/Debit Memo Entry




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Used to enter adjustments to customer invoices

Example: a $25 credit memo will be entered as a rebate to a customer

Entered as an independent memo




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Slide 5 - i--100253 [Tab]

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Type 100253 and press [Tab].





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Slide 6 - i--Click in the Total Amount field

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Click in the Total Amount field.




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Slide 7 - i--25 [Tab]

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Slide 8 - i--Click the Description tab

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Click the Description tab.

Invoice Class

• Groups invoices into categories for reporting and querying

• Can be customized by your company




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Slide 9 - i--Capri Rebate [Tab]

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Type Capri Rebate and press [Tab].

Type Capri Rebate and press [Tab].




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Slide 10 - i--Click the Terms tab

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Click the Terms tab.




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Slide 11 - i--Click the Salesrep tab

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Click the Salesreps tab.




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Slide 12 - i--Click the Invoice tab

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Click the Invoice Notes tab.




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Slide 13 - i--Click the Document Links tab

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Click the Document Links tab.

Invoice Notes

• Ability to add a note to the credit memo

• Notes are accessible throughout the system and on forms




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Slide 14 - i--Click the Memo tab

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Click the Memo tab.

Document Links

• Used to link external documents to a transaction

• Easily accessible for future reference

• Document needs to be accessible on your company's network




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Slide 15 - i--Click in the Item ID field

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Click in the Item ID field.




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Slide 16 - i--CAP 2522 [Tab]

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Type CAP 2522 and press [Tab].

Items on Credit Memos

• Can manually enter a new Item ID or use one that already exists in the database

• Informational only

• Inventory levels are not affected




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Type CAP 2522 and press [Tab].




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Slide 18 - i--[Tab]

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Press [Tab].

Press [Tab].




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Slide 19 - i--25 [Tab] 2

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Slide 20 - i--[Tab] 2

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Press [Tab].

Press [Tab].




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Press [Tab].

Press [Tab].




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Slide 22 - i--Click the Print button

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Click the Print button.




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Slide 23 - i--Click OK

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Click OK.




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Slide 24 - SB24

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Entering a Credit Memo

1. Specify the Ship To ID.

2. Check the fiscal period and year for accuracy and enter the amount for the credit memo.

3. Enter an explanation for the transaction on the Description tab.

4. Enter the Item ID, quantity, unit price, and revenue account for the credit on the Items tab.

5. Print/Save the memo.




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Slide 25 - REPLAY / CONTINUE

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Slide 1 - i--[Tab]

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Press [Tab].

Scenario

• Enter a debit memo to add $20 freight charge to an invoice.

• Enter as a referencing memo, linked directly to invoice.

• Need to enter the invoice number first.




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Press [Tab].




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Press [Tab].




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Slide 3 - i--1000959 [Tab]

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Slide 6 - i--Click the Debit Memo radio button

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Click the Debit Memo Radio button.




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Slide 7 - i--Click the Description tab

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Slide 8 - i--Freight charge for invoice 1000959

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Type Freight Charge for invoice 1000959 and press [Tab].




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Slide 9 - i--Click in the Item ID field

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Slide 10 - i--Freight [Tab]

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Type FREIGHT and press [Tab].




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Slide 11 - i--Freight charge [Tab]

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Type Freight Charge and press [Tab].




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Slide 13 - i--E [Tab]

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Type E and press [Tab].




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Slide 14 - i--20 [tab] 2

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Press [Tab].




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Slide 16 - i--350003001 [Tab]

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Slide 17 - i--Click the Print button

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Click the Print Button.




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Click OK.




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Slide 19 - SB19 - List of steps

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Entering a Debit Memo

1. Enter the number of the invoice you want to link in the Reference Number field.

2. Enter the total amount of the Debit Memo and select the Adjustment type.

3. Enter an explanation for the transaction on the Description tab.

4. Enter the Item ID, description, quantity, and unit price for the Debit memo.

5. Print/Save the memo.




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Slide 20 - Open the sidebar

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Slide 21 - Double-Click the Inquire option

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Slide 22 - Doube-click the AR Drill Down option

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Slide 23 - Double-Click By Customer ID

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Slide 24 - 100253 [Tab]

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Slide 25 - Slide 25

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Press [Tab].




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Slide 3 - i--1000732 [Tab]

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Slide 5 - i--21.07 [Tab]

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Type 21.07 and press [Tab].




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Slide 6 - i--Set the Adjustment Type field to Bad Debt Write Off

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Click the Bad Debt Write Off radio button.




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Slide 7 - i--Click the Description Tab

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Slide 8 - i--Customer went out of business

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Type Customer went out of business and press [Tab].




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Slide 9 - i--Click in the ITEM ID field

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Slide 10 - i--WRITE OFF [Tab]

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Type WRITE OFF and press [Tab].




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Slide 11 - i--Out of Business [Tab]

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Type Out of Business and press [Tab].




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Slide 13 - i--E [Tab]

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Slide 14 - i--21.07 [Tab] 2

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Type 21.07 and press [Tab].




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Press [Tab].




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Slide 16 - i--323003001 [Tab]

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Slide 17 - i--Click save

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Click Save.




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Click OK.




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Press [Tab].




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Slide 21 - i--1000733 [Tab]

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Slide 22 - i--Click in the Total Amount field 2

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Slide 23 - i--215 [Tab]

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Slide 24 - i--Set the adjustment type to Bad Debt Recovery

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Click the Bad Debt Recovery radio button.




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Slide 25 - i--Click the Description Tab 2

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Slide 26 - i--Check 52896 returned

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Type Check 52896 returned and press [Tab].




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Slide 27 - i--Click in the Item ID field 2

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Slide 28 - i--REINSTATE INVOICE

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Type REINSTATE INVOICE and press [Tab].




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Slide 29 - i--Invoice 1000733 [Tab]

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Type Invoice 1000733 and press [Tab].




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Slide 30 - i--1 [Tab] 2

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Slide 31 - i--E [Tab] 2

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Slide 32 - i--200 [Tab]

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Press [Tab].




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Slide 34 - i--[Enter]

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Press [Enter].




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Slide 35 - i--[Enter] 2

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Press [Enter].




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Slide 36 - i--[Enter] 3

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Press [Enter].




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Slide 37 - i--Returned Check Fee

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Type Returned Check Fee and press [Tab].




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Slide 38 - i--For check

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Type For check 52896 and press [Tab].




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Slide 39 - i--1 [Tab] 3

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Slide 40 - i--E [Tab] 3

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Slide 42 - i--Click Save 2

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Click Save.




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Slide 43 - i--Click OK 2

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Click OK.




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Press [Tab].




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Slide 46 - i--100954 [Tab]

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Slide 47 - i--Set the adjustment type to Tax Adjustment

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Click the Tax Adjustment radio button.




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Slide 48 - Audio Only

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Slide 49 - i--Click in the Taxable box for Florida

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Click the Taxable box for Florida.




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Slide 50 - i--Click the Taxable box for Jackson county

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Click the Taxable box for Jackson County.




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Slide 51 - i--Click the Jurisdiction Adjustments tab

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Click the Jurisdiction Adjustments tab.




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Slide 52 - i--Click the Previous Adjustments tab

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Click the Previous Adjustments tab.




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Slide 53 - i--Click the Adjust Item Taxes tab

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Click the Adjust Item Taxes tab.




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Slide 54 - Right click

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Slide 55 - Highlight the Insert option

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Slide 56 - Close the menu by clicking anywhere outside the menu

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Slide 57 - i--Click Save 4

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Click Save.




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Slide 58 - i--Click OK 4

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Click OK.




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Slide 59 - Fill Slide

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Slide 1 - i--Double-click the Disputed Invoices option

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Double-click the Disputed Invoices option.





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Slide 2 - i--1000889

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Slide 3 - i--Click the Dispute checkbox

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Click the Dispute checkbox.





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Slide 4 - i--Click Save

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Click Save.





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Click OK.





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Slide 6 - Fill Slide

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animation: using credit and debit memos in accounts...

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