credit memo

[Former Member]

Hii...

Can anyone explain me the scenerio where you post a credit memo in invoice transaction, and wat will be the accounting impact.

Regards

[Former Member · Accepted solution]

Hi

The term credit memo always refers to a credit memo from the vendor. Therefore, posting a credit memo always leads to a debit posting on the vendor account.

As in the case of invoices, credit memos refer to purchase orders or goods receipts. They are used to correct the purchase order history if the quantity invoiced was too high, for example, if an invoice was too high or if part of the quantity was returned.

When you post a credit memo, the total quantity in the purchase order history is reduced by the credit memo quantity.

When you post a credit memo, the system makes a number of checks:

The maximum quantity you can credit is the quantity that has already been invoiced. If you enter a larger quantity, the system issues the following error message:

Reversal quantity greater than quantity invoiced to date

If you post a credit memo for the same quantity as was invoiced so far, the system expects that the total amount invoiced so far is also credited. Otherwise, a situation might arise where you had no stock for a material but a stock value. If you do not enter the amount invoiced so far, the system automatically replaces your entry and proceeds to the item screen. A warning message informs you that your entry has been changed.

Reverse entry value set automatically for full reversal

If you post a credit memo for a smaller quantity than that invoiced to date, the amount of the credit memo cannot be larger than the amount invoiced so far. If you post a larger amount, the system displays an error message, such as:

Reversal value is greater than value invoiced to date

The system does not check if your entries in the columns Amount and Quantity correspond to the purchase order price or the invoice price.

[Former Member]

Hi

following is a Scenario.

created PO for 10 pieces 10rs each i.e total Po value of Rs.100

GR done for 10 pieces and so stock account affected to Rs.100

IV also done with respect to GR

Now after IV if u find that 1 piece out of 10 is defective or less in qty then u can raise raise a credit memo for 1 piece @ Rs.10/- which will be done through MIRO by selecting Credit Memo.which in turn will debit vendor account with 10 rs

The term credit memo always refers to a credit memo from the vendor. Therefore, posting a credit memo always leads to a debit posting on the vendor account.

Vishal...

[Former Member]

Hi..

Thanks vishal for your very valuable input, but i am confused at one point, when you can post a credit memo for 1 unit the vendor acount is debited .

but wat is the use of subsequent credit, can we use subsequent credit for the above scenerio wat is the difference..

Regards

[Former Member]

Hi

U can pass subsequent debit to adjust value only i.e if u pass subsequent debit qty will remain unchanged i.e 10 in our case and value will be reduced i.e vendor account will be debited by 10 RS.

If vendor has overcharged u in Po and later he want to correct same then u can pass subsequent debit to that vendor e.g. po for 10qty with 10rs each (100rs total price) and later vendor says that he should have charged 9rs per qty

In such case u can pass SC which in turn will debit vendor by10 rs and adjust item price as 9 RS per qty

(Typical example is like

suppose vendor has overcharged u for perticular PO and afterward he want to correct it

In such scenario u can post subsequent debit to correct PO without affecting Qty. field)

Vishal...