Credit Memo's


Greg Maxey

This may be more of an accounting question but I thought someone here might
be able to answer.

When I sell something to a customer I record the income in an account called
"Bulk wholesales."

Sometimes some of the things I sell spoil or go bad. When I go back to a
store I give my customers a credit and pick up the spoiled items.

I issue the customer a credit memo for the amount of the spoiled items that
they then apply to the cost of the new items that they buy.

I then do a Journal entry to debit a "Loss, spoileage, refund" expense
account and credit my "Bulk wholesales" expense account the cost of the
spoiled items.

Is this the correct way to do this?


Greg Maxey - Word MVP

My web site
Word MVP web site




Your sale/invoice is to a Sales/income account
The credit is a credit to the customer against Account Cost of

Your next invoice to the customer is for the full amount, their settlement
to you is for this less the credit
There is no expense account involved.


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