From time to time, a customer may have open credit or payment on their accounts that are not used. Therefore, the customer may request a refund to their open credits or payments. This document outlines the procedure involved to create a debit memo in A/R to offset the open credit or payment, and create the corresponding AP voucher to process the check. In our example, we use account number 2002000 for the Customer Refund Payable-AR/AP wash account. You should have a similar wash account set up in your chart of accounts for this purpose.
In this example, we have the following scenario:
Customer #: 374091 AG SUPPLY CENTER INC
Open Credit: $399.95 (document # 132976, Apply-To# 0)
Processing: We’d like to zero out of customer balance and cut an AP check to pay back the customer.
Step 1 - Create a Debit Memo to customer # 374091
(AR -> Processing -> Sales & Cr/Dr Memo Processing)
Step 2 - Post Sales & Cr/Dr Memo Transactions
Go to A/R -> Processing -> Post Sales & Cr/Dr Memo Transactions to post the debit memo just created.
Step 3 - After Post Debit memo, it shows on Customer account inquiry and the customer account balance becomes 0.00.
Step 4 - As you can see, the above credit memo is still open even though the customer account balance is zero now. You need to go to A/R -> Processing -> Re-Apply Cr/Dr Memos to make the credit memo apply to the debit memo.
Step 5 - Prepare voucher and cut a check to pay back to customer
A - Create a new vendor for customer # 374091
B - Create new voucher for customer / vendor # 374091 (first screen)
C - Distribution Account should be 2002000 (Customer Refund Payable – AR/AP) (second screen)
D - Post AP Transaction following the normal procedure.
E - Payment Preparation and Print Check following the normal procedure.
F - Post Check following the normal procedure.