How To Pay an Accounts Receivable Credit Memo

Use this procedure to:

§         Issue a refund check when a customer has been issued a credit memo in excess of invoices due and then clear the credit in Accounts Receivable

§         Clear a credit memo in Accounts Receivable when the amount is equal to an invoice amount.

To Issue a Customer Refund Check:

1.       Go to the Contact Manager and check Vendor on your customer’s record.  Then create an AP invoice for the Customer for the amount of the refund, using the Accounts Receivable account number as the Account number in the body of the invoice.

The entry will produce a JE that will look like this:

                                                      Debit     Credit

Accounts Receivable                        xxx.xx

Accounts Payable                                        xxx.xx

2.       Issue an AP check to pay the invoice, which will create a JE that looks like this:

Debit     Credit

Accounts Payable                xxx.xx

Cash                                               xxx.xx

To Clear the Credit Memo from Accounts Receivable:

1.       From the Accounts Receivable Menu, select Payments and select the Customer.

2.       Select the Credit Memo and click on the Adjust button.

3.       Adjust the Credit Memo/Invoice to $0.00

4.       In the account field, press F3 and select the Accounts Receivable account number.  The resulting Journal Entry will look like this:

Debit     Credit

Accounts Receivable            xxx.xx

Accounts Receivable                        xxx.xx

5.       Select OK and Exit

6.       Go to General Ledger and post the Journal Entry (wash) for an audit trail of the Credit Memo only.