Recording Credit Memos
Posted by Steven in Recording Credit Memos
The recording of the credit memo is a lot like recording the payments. They reduce the customer’s balance in the sub ledger and general ledger summary entry. The entry credits A/R and debits the original sales account. In addition , the origin of debit will help determine where the proper entry will be. For example memos from the returned merchandise debit sales and sales returns. Since the credit memos operate much the same as cash, It’s important to exercise tight control over their distribution and use. Require the appropriate paper work and authorization before credit memos can be entered into the system. Consider batching credit memos separately when entering them into the A/R system. Proper controls dictate that credits need to be approved before they can be issued. Make credit memos work within the system, but make those who process credit memos work through the system check points before giving the credit. Hope you had enough explanation on how to record the credit memos and we’ll get deeper in the next post where we can have a brief on how to record the returned merchandise.
