If a customer has partially paid for the items sold then it easiest to follow these two steps:
 
1. Create a Credit Memo for the unpaid balance of the billing- The process to create a credit memo is almost the same as creating a manual billing. The main difference is that when the billing lines are entered, they are entered with negative values. This will automatically change the type from invoice to credit memo. The transactions created when posting a credit memo are a debit to the GL account that is populated in the Revenue Account selected on the billing line, and a credit to the AR Control Account. 
 
Tip - To associate the credit memo with an original billing, place "Credit Memo for Billing number xxxxxxxxxx" in the Proprietary Billing Number field.
 
2. Apply the credit memo to the billing.
 
3. Create an inbound inventory movement with a type of Accounting. Set the Credit GL account to the value used to record Cost of Goods Sold. This will increase the quantity available for that product and take it out of Cost of Goods Sold and put it back into Inventory. 
 
4. Create an Account Payable to the customer for the amount originally paid and to be refunded. The amount to refund on the account payable line should be positive. The value for the product on the Account Payable line should be blank or null.
 
Tip - In the Payee Reference field of the Accounts Payable, indicate the Billing and reason for the refund to the customer. This explanation will be printed on the check or if a credit card transaction can be useful in reconciling the account.
 
5. Create a Cash Disbursement by following the standard instructions for creating a single or batch cash disbursement(s).

 

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2 Comments

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    Rebecca Ralls

    This is missing the step to create an inbound movement to bring the item back into the correct inventory balance. It should be the same as discussed on the "Return of an unpaid inventoried sale", shouldn't it?

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    Ryan Faulkingham

    Hi Rebecca,

    Yes, you are correct. Any products that are sold and then returned will have to be put back into inventory through an inbound inventory movement. Thank you for pointing this out. 

    Thank you,

    Ryan

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