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?

Thanks.

--
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Greg Maxey - Word MVP

My web site http://gregmaxey.mvps.org
Word MVP web site http://word.mvps.org
~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 

[DL]

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

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.

 

[Greg Maxey]

DL,

Thanks. I understand now.

--
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Greg Maxey - Word MVP

My web site http://gregmaxey.mvps.org
Word MVP web site http://word.mvps.org
~~~~~~~~~~~~~~~~~~~~~~~~~~~~