Recording a Check Refund from a Vendor
We had a support question on how to record a check payment from a Vendor after recording a Credit Memo.
A credit memo from a vendor was entered leaving a credit on their account. Then they received a check for the amount of that credit balance from the vendor.
When the Credit was entered originally it was not applied.
This left a Credit balance on the Vendor and a Debit to the payables account.
When you received the refund check, the first thing you need to do is offset the Credit Memo on account.
(Purchasing >> Transactions>> Transaction Entry) Select Document Type Misc. Charge
You could use the Check number as the Document number. Enter the amount under Miscellaneous. You will not be able to apply to the credit from this screen.
Next you will need to distribute the Misc. Charge.
The Credit to the Accounts Payable will offset the Credit Memo, now you need to debit that to a Misc. Expense account that you will offset when you record the deposit.
This will clear the credit on the Vendor’s account and the balance in the Accounts Payable account.
Next you will want to apply the Invoice to the Credit.
Purchasing >> Transactions >> Apply Payables Documents.
You choose the Vendor, then choose the Credit Memo.
Choose the Apply Date and Apply Posting Date.
The Original Amount will be the amount of the Credit Memo. Apply to outstanding transactions until the Unapplied Amount is $0.00.
Next you need to post the deposit. Follow these steps:
To record the receipt in bank account, open the Bank Transaction Entry window.
(Financial>>Transactions >> Financial >> Bank Transactions) and select “Enter Receipt” option.
Enter the checkbook and payment details.
This will a debit the Cash account and use the GL Misc. Expense account from the Transaction above on the credit side.
This will create a check waiting to be deposited. Open the Bank Deposit Entry window (Financial>>Transactions >> Financial >> Bank Deposits).
Select the checkbook, mark the check for deposit and post it.
Let us know if you have any questions on this process. Email us at firstname.lastname@example.org