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:
Click Enter Purchase in the Purchases Command Center
Enter the Vendor's name
Enter a negative number into the Bill Number
Select the appropriate Item
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:
Going to the menu bar at the top of the screen and clicking "Lists"
Select Accounts from the drop down menu
Clicking the "New" button in the bottom left corner
Choosing "Detail" in the upper left corner of the create account window
Picking a free Income account number (4-XXXX) and hitting tab
Enter an appropriate name (Bad Debt, Return, etc)
Clicking OK in the bottom right corner
To create a debit memo for this Vendor:
Click Enter Purchase in the Purchases Command Center
Enter the Vendor's name
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
Enter the amount as a negative number
Record the credit
Apply a Debit Memo to an Open Purchase
You can apply a debit memo to an open purchase by:
Open the Purchase Register
Click on the Debits & Returns tab
The Debit Memo will be in the list
Select the Debit Memo from the list and click Apply to Purchase
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:
Open the Purchase Register
Click on the Debits & Returns tab
Highlight the Debit Memo in the list
Click Receive Refund in the bottom right corner
Select the Bank Account you want to receive the refund to in the Upper Left
Enter in the correct date and click Record