Debit Credit Memo Entry

Table of Contents

Overview

Debit and credit memos allow adjustment to the balance of an invoice and ultimately the customer’s account balance.  It also provides an audit trail that shows modifications made to invoices and accounts.

Detail

AR > Process Transactions > Debit/Credit Memo Entry

Credit memos are issued to reduce the balance of an invoice.  If there is no open invoice on a customer’s account, a credit memo that can be issued and applied later to an invoice through the cash receipts screen (see the zero dollar check information in the cash receipts section).

Debit memos are used to increase the balance of an invoice or customer account.  These are not used as often as credit memos.  Typically, if an invoice is used to charge a customer for other miscellaneous charges, an invoice is used.  Debits can be applied to open invoices or simply entered as an open debit memo that is later paid through a cash receipt.

Entering credit and debit memos -header information

Go to AR > AR Transaction Processing > Debit/Credit Memo Entry

Enter the credit or debit memo information as described in the table below.  Debit and credit memo entry is similar to entering invoices with one notable exception.  The user will enter the total amount of the credit or debit that gets discounted as part of the header information.  The detail lines must add up to this total or the document will not be saved

  • Type - Choose either a debit or credit memo.

  • Date - This is the date of the document.  It also controls the date of the change to the customer’s account for aging purposes and controls the date of the posting to the General Ledger.

  • Document - This is the number of the document.  If the A/R Setup is set to automatically number documents, this field is automatically filled in and is skipped.

  • Customer - This is the customer number of the customer’s account being modified with the debit or credit.

  • Apply To - For credit memos, this is the invoice or debit memo to apply the credit against.  For debit memos, this is the invoice or credit memo to apply the debit against.  This field can be left blank to enter an open credit or debit memo, which is then later applied to an invoice or is paid via cash receipt.

Note: Only processed documents can be entered here.  If an invoice is entered and not yet processed, no credit or debit can be applied against it.

  • RMA Number - Use this field to enter a credit memo for a customer RMA.  Enter the RMA number, press tab and the credit memo will be filled in automatically based on the information in the RMA number.  Only RMA’s that are created from sales orders can be used.  Use F9 for a list of RMA's that are for that customer.

  • A/R Account - This is the General Ledger account to debit for the total of the invoice.  Press F9 to open the Account Find screen.  It will default to the customers default AR account.  Only General Ledger accounts designated as an A/R sub ledger account can be entered here.

  • Tax Authority - This is the sales tax authority that has jurisdiction for this sale.  The tax table set up for the tax authority is then used to calculate the amount of sales tax for the invoice.  The user can press F9 to display a list of valid Tax Authorities.

  • Customer PO - This is the customer’s purchase order number, if any

  • Net Amount - This is the amount of the credit memo.  The detail lines of the credit must add up to this amount.

  • Shipping - If any of the credit memos are for shipping charges enter them here.  When the document is processed, this amount will be posted to the Freight Account identified on the Order Entry setup screen.  This amount is added to the Net Amount for the total of the credit memo.

  • Shipping cost - If there is a shipping cost that is getting reversed with the shipping charge you can enter it here and it will update the appropriate GL accounts.

  • Tax - Check the box if the shipping is taxable.

  • Tax Amount -  The tax amount that is being reversed

  • Total – Total of the Credit or Debit memo that is being created

  • Taxable Amount – the amount of the Credit/Debit memo that is Taxable

  • Undistributed amount – comparison of the Memo amount entered in the header information to the total of the amount entered into the line detail section.  This amount has to be zero for the Memo to be saved and processed.

  • Finance charge – If this credit memo is a finance charge you will need to check the finance charge box. 

  • Pay commissions – If a commission needs to be adjusted due to this memo you will check this check box.

Click on the Save icon on the toolbar and process the credit memo using the Process AR Transactions screen

Note:  You will be taken to the miscellaneous screen as soon as you tab/enter through the shipping field.  As with all of TRX it is important that you use the Tab or enter button to navigate, do not use your mouse to click around.

Miscellaneous Header Information

The Misc. tab of the document allows you to specify a Bill To, Ship To, Salesperson, Terms and if applicable, Project # for the document and if it should be applied to an Advanced Project Billing as well as comments.

  • Bill to - This is the customer contact that should receive the document.  The customer’s default billing contact is automatically entered.  Press F9 to search for other contacts for this customer.  Only contacts designated as a billing contact can be entered.

  • Ship To - This is the customer contact that will receive the goods or services specified on the document.  The customer’s default shipping contact is automatically entered.  Press F9 to search for other contacts for this customer.  Only contacts designated as a shipping contact can be entered. 

  • Salesperson - This is the salesperson that should receive a commission for the document.  The user can press F9 to display a list of active salespeople.  Only active salespersons can be entered.

  • Comments - Enter any comments on the invoice up to 500 characters.

  • Project # - If the Memo is to be applied to a project this box is used to specify which project that would be.  This does not affect any advanced billings on the project.

  • Apply Projects Advance Billing credit – check if this memo will be applied to a project’s advance bill

Notes

Each credit or debit memo can have notes entered.  The notes are to be used by TRX Enterprise users and are only printed on the Customer Aging report when requested.  Each note, which can be up to 2000 characters, is recorded with the date, time and user who entered the note.  Notes are normally public, which means other users can see and read, but not change the note.  Only the user who entered the note can edit a note.  If a note is not public, then only the user that entered the note can see the note. 

The notes tab of the Debit/Credit Memo Entry screen allows you to enter notes about the document.  Use the notes tab of the Debit/Credit Memo Query screen to add and view notes on the document.

Debit and Credit Memo Detail

The detail lines of the credit or debit memo indicate what items or services are being credited or debited as well as the Quantity, Price, General Ledger accounts, and any discounts.  Document totals are then calculated from these lines.

After entering the header information, the cursor will move to the first detail line.  Enter as many line items as needed.  The document totals will automatically recalculate as lines are entered.  When all lines have been entered, click on the Save button on the toolbar

  • Qty - This is the quantity of the item or service.  It will default to 1.

  • Item - Enter a non-stocked inventory item or leave it blank.  The Sales Account will need to be entered if quantity is blank.

  • Description - This is the item description.  Enter up to 100 characters.  An additional 500 characters can be entered on the comment section of the line.

  • Sales Account - This is the General Ledger account to be affected by the credit or debit.  Only General Ledger accounts designated as a sales account can be entered.  You can Press F9 to open the Account Find screen.

  • Tax - A checkbox denoting if this item is subject to sales tax, if the item is a non-stocked inventory item, this will default in from the item.

  • Unit Price - This is the unit price of the item/service being sold.  If the item is a non-stocked inventory item, this is the item’s selling price.  The price can be changed to any value.

Note:  Price rules have no effect on credit or debit memos.

  • Cost - This is the unit cost of the item.  It is used to calculate the margin amount and margin percent.  If a non-stocked inventory item was entered, the cost of the item at the Inventory default warehouse is used.  Otherwise a cost needs to be entered.

  • Commission Calculation - This is the formula to use to calculate the commission for this line item.  Its default value is from the Order Entry setup screen.  See the section on Calculations and Formulas for details on the different commission calculations.

  • GM Modifier - This is used when using the Adjusted Gross Margin Commission Calculation.  Normally it is left at zero.  See the section on Calculations and Formulas for details on the GM Modifier and how it is used.

  • Commission % - This is the percentage to use when calculating the commission for this line item.  It defaults to the commission percent of the salesperson on the invoice.

  • Comments - The user can enter up to 500 characters for a comment on each line item.

  • Print - Check this box, if the comment for the line item is to be printed on the invoice.

Debit Credit Memo Details – Comments

 

Through this screen you can add any comments to the line item and check them to print on the memo.  Many times if you have a lengthy description that does not completely fit in the description field, you can continue it on the comments line and mark the comments line to print on Memo.

Debit Credit Memo Details – Costs

If there were any costs associated with the memo that was created they will show on the costs tab.  The cost basis will adjust based on your inventory cost basis, if you are using a LIFO inventory it will be the LIFO cost.

Debit Credit Memo Details – Commissions

If commissions were to be affected by the memo you would be able to alter the modifiers on this screen.  The method of calculation is a default setup in AR setup and will default into the screen but can be edited.