Credit Entry

Occasionally you will need to issue a credit against invoice charges. This may be due to incorrect billings, disputes over amounts, discounts allowed, or any number of other reasons. When this happens it is necessary to reduce the balance of an invoice in order to assure that the payment for the invoice is the proper amount and that the General Ledger reflects the proper amount of the receivable and corresponding sales amount.

NOTE: Credit amounts are not entered into the BasicBooks General Ledger until they have been applied against an invoice. Thus, the only amount reflected in the journals and general ledger are the credit amounts which have been applied. If a credit is entered into the database but not applied it has no effect on your financial reports. Deleting a credit which has not yet been applied also has no effect since it was never entered into your journals or ledger in the first place. When you have saved a credit entry it is available to apply to invoices immediately or it can be saved for later application.

To enter Credits:

Select:

Credit Selections -> Credit Adjustments -> Enter New Credit

Before entering credits you must select the customer to whom the credit is to be issued. After selecting the customer the entry window will appear. The entry window consists of two parts. The top part is for entering the original credit information. The bottom part is used for applying the credit amount to invoices for this customer.

Entering the Credit

The first step in entering a credit (also referred to as a Credit Memo) is to enter the credit data in the top portion of the window. Each credit entry must have a unique Credit/Adjustment Reference Number. Duplicate numbers are not allowed. Use any alpha and/or numeric system you wish as long as each credit has a unique number. Today's date will be automatically entered as the Effective Date. You may override this entry. Next, enter the total credit amount in the Original Credit Amount box. You may also enter up to two lines of comments about this credit. These comments are for your own information only and are not used anywhere else in the program.

The Amount Applied and Balance Available To Apply boxes are maintained by the credit application process. You can not make entries in these fields.

Figure: Credit Entry Window

To abort the credit entry click the Close button before saving the entry.

When you have entered the data about the Credit click the Save button to save the credit memo in the database. After you have saved the credit the bottom half of the widow becomes active and you may now apply the credit against invoices for this customer. Or, you may click the Close button to exit and then apply the saved credit at a later time.

As you apply the credit against a customer's invoices the balance due on the invoice and the remaining balance of the credit will be automatically reduced, until the credit reaches zero. The outstanding amounts shown on the Customer maintenance windows will also be updated.

After saving the credit you may apply the credit immediately by double clicking the Apply to Invoice Number field. You will see a list of invoices for this customer. If all invoices have already been paid you will not be able to apply the credit but it will be saved for future application. If you click the Close button the credit will be saved for future application.

If the invoice is still OPEN (unpaid) the boxes showing the Accounts Receivable Account Number, Invoice Balance In Receivable and Sales Account Numbers and Amounts originally used to record this invoice will be automatically completed. The Invoice Balance In Receivable is the net amount of the invoice remaining after previously applying credits and payments. This is the outstanding balance of the invoice. You can not apply credits exceeding the outstanding balance of any invoice. Applying a credit causes the balance of the Accounts Receivable Account and Sales Account(s) originally used to be reduced by the amount of the credit applied in each box corresponding to the sales account number. You may change any of these account numbers.

Click the Save button and the bottom portion of the screen will be activated. (Fig. ) See the application procedure below for how to proceed with the application.