Sales Returns – Credit Memo
Now let me show you how to record sales returns. We’ve done the reversal of wrongly posted sales of 2,000. Now we are going to record sales returns of 200. Sales return is actually sales customer, which is written by the customer. For example, you have sold $2,000 worth of goods to this customer, and he noticed that out of the 2000, 200 worth of goods are found to be faulty, so he wants to return the faulty goods to Sun Limited. See this, that’s how a sales returns transaction happens.
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This means the sales is written by the customer back to the Sun Limited company. Alright, earlier, we sold 2,000 worth of goods to this customer. Do you see the arrow, it’s coming in the reverse way back to Sun Limited? Okay.
Let us do a sales returns now. Let me show you a decode. I’m in the menu path. This here, accounting, financial, accounting, account receivable, document entry, credit memo, not invoice, okay. Invoice is to post the sales, this one.
This one, you have to use credit memo because it’s considered a credit memo.
This transaction, the decode is FB75 over here. Now, you would change the customer first.
Choose the customer. Customer B. Document date is default date. The amount is 200, and for the G/L account, you have to choose the same G/L account to which the sales were posted to it. It is this, right?
We posted to laptops account, so we are going to post it.
Let me just open up the document to which the sales was posted to. I don’t know which account is that, and which document number is that?
Let me just open up the document number. 2009. Sun. Enter.
Okay. Let me just check. It should be this one. Double-click. Here. 2000. Do you see this? This is the original sales invoice that was posted using this. Now, when you want to choose the G/L account, you have to choose the same G/L account as sales laptop, only then you’ll reverse out the amount from here.
Do you see this? Do you see the postings? Customer will be credited. Do you see the minus sign here? Whereas in the invoice, the customer was debited. It’s a positive sign. So when you do a credit memo, the amount will be posted in a reverse way, which means the customer will be credited and the G/L account will be debited.
Do you see this? G/L account. In the invoice, the G/L account is credited. In the credit memo, the G/L account will be debited so that the amount will be reduced accordingly. Let’s post it.
Do you see this posted? You see, the document number is not starting from 18 series. It is starting from 16 series. The system will use different series, number series, for different type of documents. For invoice documents, it will use 18. For credit memo, documents will use 16 series. There is a way how you configure this, what number series to be used for document type.
I’ll show this in the advanced training section. For invoice, it is configured to use 18 series, that’s why the number is generated from the 18 series. Let’s not worry about that. Let’s check the document. Do you see this? It’s posted. Okay. Let us go and check the balances now. Quit. Quit. All the way.
Come here. Go to accounts. This one. Pull out the laptop sales account, which is 500,000. All items. It’s loading. You see this?
This 2, 000 corresponds to the original invoice amount, this one. This 200 corresponds to sales returns, the credit memo that we posted just now, 200. This is positive, this is negative, so the balance is 1800. See, 1800. This one is the reversal that we did.
Remember, for this transaction, go down here, reversal, wrongly posted sales, 3000, so that correspond to this two amounts. The net effect is zero minus 3000, plus 3000, the net effect is zero, so don’t look at this. This minus this is 1800 now. Okay, I see the document number 16 series. Now let’s check our customer account. You cannot check customer account here because this is a G/L account.
You have to go to a different report. That is over here. Close. General ledger. It’s in account receivable, account, this one,
This is where you can see customer balances. Come here, pull out, what is the customer account? This one, 500,001. All items. Alright. Let’s do it now.
Do you see this? This is the original invoice posted. This is credit memo, minus 200. The balance is 1800. It’s in red color because this invoice is still outstanding, and incoming payment has to be made. Anything you intend to keep is in green color. Okay. That’s why it’s showing red.
Alright, let’s now go to the data flow. Okay, we have done these two parts. Sales, and then, sales returns.
Customer C001, and then, we have other transactions that we are going to see shortly. We have also seen this. Sales of 3000 and a sales returns of 3000. These two are completed too.
Okay, the next thing we’re going to see is, let me just check, incoming payment of 500. All right, this one, incoming payment of 500. Incoming payment means that any payments from customer to Sun Limited. We’ll see that in the next.
You may watch the full course on the following YouTube link
https://www.youtube.com/watch?v=GZbJe63iOos&list=PLN17Nn94liux88cwVwqbiRQQo1qK4sOdQ&index=15&pp=iAQB