imapcts of revenue accounts after creating the debit & credit memo

[Former Member]

Hello ,

Could you please explain the impacts of revenue accounts after creating the debit memo and credit memo.

Please expalin in the point of customer and company.

Thanks,

Kvv

[Former Member · Accepted solution]

HI,

Lets say billing amount 1000 Rs , When the billing Doc. Pass to accounting the entries will be like this :-

COMPANY CUSTOMER

Initial entry Debit (DR) -1000 Rs. TO Credit (CR) +1000 Rs.

After Payment Credit (CR) +000 Rs. TO Dedit (DR) -1000 Rs.

After CREDIT NOTE to Customer Of 200 Rs. the entries would be like this :-

COMPANY CUSTOMER

Debited (DR) -200 Rs. TO Credited (CR) +200 Rs.

Letu2019s say by mistake Company raise the Credit Note (Credit Memo) of 200 Rs. Actually it has to be of

100 Rs. for that the entries would be as follows:

COMPANY CUSTOMER

Credited (CR) +100 Rs. TO Debited (DR) -100 Rs.

I hope this will help you to understandu2026..

Regards

Deepak

[Former Member · Accepted solution]

Hello ,

Thanks for your solution.

Could you please expalin that as theorytical so same that i will expalin to my client.

Please do needful.

Thanks in advance

K

[former_member1091983 · Accepted solution]

Hi,

when u generate Credit memo

customer a/c would be Credited

Company's revenue a/c would be Debited

In Debit memo

Customer's a/c would be Debited

Company's revenue a/c wud be Credited

Reg

JJ

[Former Member · Accepted solution]

Hi,

Pls. find the senario...

Lets say Order is containing 2 line items :

Item 10 Mat. 111 Qty. 15 Price 10 Rs./Each = 150 Rs

Item 20 Mat. 222 Qty. 45 Price 20 Rs./Each = 900 Rs

So the Total Order value is 900+ 150=1150 Rs.

1.After delivery we will create the Billing of the same amount , Because initially we are giving Credit Customer so the billing amount 1150 Rs. is minus from Company Revenue Account because after delivery Customer is liable to pay this much of billing amount. Therefore the same amount will be added to Customer account .

2.When the Customer clears the payment of amount 1150 Rs. to company the accounting entries will be reversed .Mean to say from Customer Account value 1150 Rs. will be deducted & in Company Account the same Amount 1150 Rs. will be adding to Company revenue account.

3.Now, letu2019s say some material was faulty letu2019s say 5 material each from both the line item & the customer want his money back of those faulty material , so the resultant Company is giving the credit note (credit memo) to customer of that much of amount (means credit Note of Rs. 50 (line item 10 )+ 100(line Item 20))= 150 Rs. So amount 150 Rs. would be Credited to customer Account from Company Account Debited 150 Rs.(Means on his next purchase either the company will charge him 150 Rs. less or they will give back to customer 150 Rs. This amount will be minus = debited from the Company account.

4. Now assume by mistake Company charged him (customer) less or by mistake they (Company)cut the Credit Note to Customer or Higher amount (i.e more than actual credit amount) , so now they issue the debit note to customer of high amount . Mean to say that extra amount will be debited =minus from the customer account & will be add to Company revenue account =credited to company account.

I hope this will solve ur queryu2026u2026

Let me know if anything is not clearu2026..

Regards

Deepak

[Former Member]

Thanks for ur answer