I need to find the best methods to handle the following:
If I invoiced a company for a service, and they paid the invoice. It has been discovered that a refund is due back the company.
How do I refund the money without overstating the sales for the year? I created a credit memo but the only way to offset the credit memo would be a invoice. Would this not overstate?
When I write the check Dr. Expense and Cr. Cash, is this not the correct.
Any advice.
You can also offset the credit memo with a refund check. The credit memo reduces sales for the amount of the refund.
When you created the Credit memo, select save and close. You should be prompted to "Give a refund". Select this option and click ok. Another window pops open labeled "Issue a Refund". Next, select "issue this refund via check" in the upper right hand corner and select the appropriate checking account. Make sure the "to be printed" box is checked. Click OK and then go to File>>print forms and print your check to the customer.
The correct transaction is Dr A/R and Cr Cash.
Thanks for your response. Just so I understand this transaction as it is the first time I have had this occur.
Original was
Dr. AR CR. Revenue Invoice customer Dr. Cash CR. AR Payment of the AR received and applied
Reconcialtion in later period determines a refund needed
Adjustment
Created CM which in essence is DR. Revenue and CR. AR Issue refund
Do I have this right or am I off base?
That's correct. Now issue the refund check to be applied to the open CM: DR AR Cr Cash. and you'll be done.
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