PLEASE EXPLAIN THE PROCESS OF REFUND OF ADJUSTMENT BY THE SUPPLIER, WHEN NO WORK IS CARRIED ON AND SUPPLIER HAS RETURN THE 100% ADVANCE PAYMENT.
HOW THIS PREPAYMENT WILL BE SETTLE IN AP. PLEASE EXPLAIN BOTH SITUATION WHERE ADVANCE PAID AGAINST PURCHASE ORDER AND NO WORK IS DONE AGAINST IT. HOW THE PREPAYMENT WILL BE SETTLED.
IF PREPAYMENT GIVEN AGAINST NON PURCHASE ORDER.
PREPAYMENT ADJUSTMENT
Hi,
U can adjust prepayment return by one standard Invoice with a dummy account in distribution for the same supplier for same amount which you have in your prepayment for the adjustment. Now create one Credit Memo for the same supplier for the same amount and choose same dummy account in distribution.
Example.
A) a) Suppose U created one Prepayment Invoice for supplier ABC for Rs.10000/=
ABC Rs. 10000/= Cr.
Supplier Advance Rs. 10000/= Dr.
Note: If you have chosen Supplier Advance a/c in distribution created for advance payments.
b) Once you make Payment of this Prepayment Invoice
Cash Rs. 10000/= Cr.
ABC Rs. 10000/= Dr.
c) Now result of Transaction A.a and A.b
Cash Rs. 10000/= Cr.
Supplier Advance Rs. 10000/= Dr.
B) a) Now create Std. Invoice for same amount with a dummy account in distribution for the same supplier ABC
ABC Rs. 10000/= Cr.
Dummy A/c Rs. 10000/= Dr.
b) Now you adjust this Std. Invoice with the Prepayment Invoice
Supplier Advance Rs. 10000/= Cr.
ABC Rs. 10000/= Dr.
c) Now result of transaction B.a and B.b
Supplier Advance Rs. 10000/= Cr.
Dummy A/c Rs. 10000/= Dr.
C) a) Now you create Credit Memo for Supplier ABC for the same amount with the dummy account in distribution and make payment to it.
Dummy A/c Rs. 10000/= Cr.
Cash Rs. 10000/= Dr.
D) Net result of A.c and B.c
Cash Rs. 10000/= Cr.
Dummy Rs. 10000/= Dr.
Now if u compare C and D accounting entries, u will see they are just reverse entries.
So once you create Credit Memo, Prepayment Amount comes back to your cash account (or the account which you have used to make payment to prepayment invoice instead of cash).
Thanks,
Satya
U can adjust prepayment return by one standard Invoice with a dummy account in distribution for the same supplier for same amount which you have in your prepayment for the adjustment. Now create one Credit Memo for the same supplier for the same amount and choose same dummy account in distribution.
Example.
A) a) Suppose U created one Prepayment Invoice for supplier ABC for Rs.10000/=
ABC Rs. 10000/= Cr.
Supplier Advance Rs. 10000/= Dr.
Note: If you have chosen Supplier Advance a/c in distribution created for advance payments.
b) Once you make Payment of this Prepayment Invoice
Cash Rs. 10000/= Cr.
ABC Rs. 10000/= Dr.
c) Now result of Transaction A.a and A.b
Cash Rs. 10000/= Cr.
Supplier Advance Rs. 10000/= Dr.
B) a) Now create Std. Invoice for same amount with a dummy account in distribution for the same supplier ABC
ABC Rs. 10000/= Cr.
Dummy A/c Rs. 10000/= Dr.
b) Now you adjust this Std. Invoice with the Prepayment Invoice
Supplier Advance Rs. 10000/= Cr.
ABC Rs. 10000/= Dr.
c) Now result of transaction B.a and B.b
Supplier Advance Rs. 10000/= Cr.
Dummy A/c Rs. 10000/= Dr.
C) a) Now you create Credit Memo for Supplier ABC for the same amount with the dummy account in distribution and make payment to it.
Dummy A/c Rs. 10000/= Cr.
Cash Rs. 10000/= Dr.
D) Net result of A.c and B.c
Cash Rs. 10000/= Cr.
Dummy Rs. 10000/= Dr.
Now if u compare C and D accounting entries, u will see they are just reverse entries.
So once you create Credit Memo, Prepayment Amount comes back to your cash account (or the account which you have used to make payment to prepayment invoice instead of cash).
Thanks,
Satya
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