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rebate process

Former Member
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need some help understanding the finance side of the rebate process and settling rebates. already done a search on this on sdn and google and just need more clarification in very simple terms. lets say i create an invoice for an order in the amount of $1000 and $10 of that amount is rebate. what should the initial accounting entries be? and then i settle the rebate and create credit memo req, and then credit memo in the amount of $10, what should the accounting entries be for that?

the way i understand it is that, when you give something away you credit, when you receive something you debit. keeping that in mind could you please explain the above entries.

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Former Member
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Hi,

Let us take your example.In your example $1000 is the amount in your order and $10 is the rebate.

Here $1000 will be debited from the customer account and $10 will be again credited into this account.Means the total of $990 will be debited from customer's account.

This process will happen if we go for the invoice.And also this $990 will be credited to your account(Bank account) if you pay that amount by using F-28 T.Code.

If you create the credit memo,then the amount $1000 will be credited to customer's account and $10 will be debited from this account.So a total of $990 will be credited to this account and the same amount will be debited from bank account/reconcialtion account.

Hope this is clear for you without any confusion.

Regards,

Krishna.

Former Member
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thank you krishna, but i'm still a little confused. i'll try and explain again where the confusion is. this is my basic understanding of dr and cr, when money comes in you debit, when money goes you credit.

this is actually a 2 part question.

part 1) sales order for $1000 for customer abc. rebate on that sales order is $10. i create invoice. on that invoice what will the accounting entries be and why?

part 2) i settle rebate, clear the credit memo req, and create credit memo. lets assume i only have the one transaction above for the settlement. what should the accounting entries be for credit memo and why?

thanks!

Former Member
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HI

Dont worry Let me clarify your doubts.

Customer A Selleing Product 1000/-rs and rebate is 10/- for the month of Oct 09

While Selling Products if Customer is eligible for Rebates then We have to maintain Rebate Accounts calld as a Accurals in SAP

Accurals is nothing but Account Key Same Amout is Debited and Credit Same G/L Account for Record Purpose ONLY.

Now Here we are selling Ac Entries is 1000/- Debit to Customer and Our Accural Account its show us 10/- is eligible for Rebate for Particular Customer Account.

I hope this is clear from Sales Point of view.

Now Rebate Settlement

Settlement is nothing but we are Credited 10/- to Customer Account with the reference of Accural Account.

Now when you do Rebate Settlement (Credit Memo) then Customer Account will be credited 1000-10=990/-

Customer has to pay only lo 990/-

This is whole process of Rebate.

Hari Mandav

Former Member
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thank you!

so, just to be clear... when i create invoice, why i debiting customer account and crediting my revenue account and rebate accrual account? i debit because cust is getting something and i credit revenue because revenue is going down by giving him something? just trying to understand the basic debit and credit process of sending out an invoice and then sending out a credit memo.

and would entries reverse when payment is actually received?

Former Member
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Hi

Exactly you r right, But Before that you should know What is Rebate?

Rebate is nothing but a Discount giving to customer based on VOLUME..

you cant give Rebate each processing, Because Rebates generally when the customer reaches volume with in the year or six months then only we are settling rebates, in that case we have to maintain records in SAP and would show to customer also.

for that only initially we are debiting and after that we are crediting to customer.

If am wrong pl correct me..........

Hari Mandav