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Create a Vendor Credit (Debit Memo)

Table of Contents

Background Creating a Debit Memo Creating a Debit Memo for an Item To create a Debit Memo for an Item: Creating a Debit Memo for a Non-Item Purchase To create a debit memo for this Vendor: Apply a Debit Memo to an Open Purchase Receive Refund

Background

When you receive a credit from a Vendor that you pay, you create what is known as a debit memo. Going forward the rest of this article is going to use that terminology. This can then either be applied to an open purchase or received back as a refund depending on what you and the vendor decide to do.

Creating a Debit Memo

Creating a Debit Memo for an Item

If the purchase you made from the Vendor was for an item that you inventory, you need to create the debit memo using those items so that it correctly adjusts your inventory.

To create a Debit Memo for an Item:

  1. Click Enter Purchase in the Purchases Command Center
  2. Enter the Vendor's name
  3. Enter a negative number into the Bill Number
  4. Select the appropriate Item
  5. Record the Debit Memo

Creating a Debit Memo for a Non-Item Purchase

Before you create a non-item debit memo you need to know which account you want to apply this credit memo against. Normally this would be the expense account the purchase was originally recorded against. If you would rather apply this against an income account you can. You can create this account by:
 
  1. Going to the menu bar at the top of the screen and clicking "Lists"
  2. Select Accounts from the drop down menu
  3. Clicking the "New" button in the bottom left corner
  4. Choosing "Detail" in the upper left corner of the create account window
  5. Picking a free Income account number (4-XXXX) and hitting tab
  6. Enter an appropriate name (Bad Debt, Return, etc)
  7. Clicking OK in the bottom right corner

To create a debit memo for this Vendor:

  1. Click Enter Purchase in the Purchases Command Center
  2. Enter the Vendor's name
  3. In the body of the bill, select the income account to which the debit is being applied. This would normally be the same expense account from the original invoice or an invoice account created above
  4. Enter the amount as a negative number
  5. Record the credit

Apply a Debit Memo to an Open Purchase

You can apply a debit memo to an open purchase by:

  1. Open the Purchase Register
  2. Click on the Debits & Returns tab
  3. The Debit Memo will be in the list
  4. Select the Debit Memo from the list and click Apply to Purchase
  5. Choose Purchase you wish to apply the Debit to and record it

Note: If you use Categories the Debit Memo and the Purchase have to have the same Category.

Receive Refund

You can receive a refund against the open Debit Memo by:

  1. Open the Purchase Register
  2. Click on the Debits & Returns tab
  3. Highlight the Debit Memo in the list
  4. Click Receive Refund in the bottom right corner
  5. Select the Bank Account you want to receive the refund to in the Upper Left
  6. Enter in the correct date and click Record
debit memo vendor credit

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