Clear remaining balance of a partially applied credit memo- vendor sent a check

Lisa Marschewski

Hello, I'm wondering if anyone has had to remove a partial credit memo. I received a credit memo and applied 40% of it to an invoice. Six weeks later, the vendor sent a check for the remaining 60% of the credit which was entered by the AR department. Now, I still have the credit balance in AP. Before I complicate things, I would like to know the right way to correct this please.

Roberta A. Gilbert

Which account did your AR Dept use to record the check? Since you've probably already reduced expense with the original credit memo, you don't want to duplicate that in the AR Dept.


One possibility might be to create an internal invoice in AP for the amount of the credit memo still open, and charge that invoice to the same account AR used for the check. Then those 2 entries will cancel out and you won't have any duplicate revenue/expense entries.


Next, apply the open credit memo to your new invoice, which should reduce the amount owed to $0. Then pay the $0 balance without printing a check - use a 0-amount bank draft perhaps. That *should* get the rest of the open credit memo off your AP books, while providing an audit trail. (If your business rules prevent you from paying a 0 balance, that's probably ok, as long as you don't appear to have any open activity in the vendor record.)


I'm also curious to know if anyone else has a better way to do this.


Roberta

Cristin Gaffney

I'm trying to figure this out now, too. We got a refund from a vendor due to our overpayment. I created the credit memo in A/P, and recorded the deposit (offsetting the AP GL account), but now I have an “unapplied” credit memo. Wondering if you ever got any other answers to your query, or if I should create a “dummy” invoice like what was suggested by Roberta (below)? Or if I should just delete the credit memo and do a journal entry instead…

Lisa Marschewski

Hi,


I created a fake invoice to clear the balance. I thought it was the quickest way to do it.

Lisa

Cristin Gaffney

Perfect, I'll do that. Thanks for the quick reply!