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Becky7413
Level 1

How to issue a credit memo to a Customer for an expensed Products/Services? The credit will be applied later as a payment to an invoice.

We sell inventory to customers who use a small portion of their inventory as samples to their own customers. We have agreed to share the cost of sampling, and our customer invoices us each month for our share of the inventory used in sampling.

 

A credit memo is not working. I think the problem is the Products/Services is keyed to a Sales/Marketing expense account not an income account. How can I record the customer credit and later be able to apply the credit against an invoice?  

2 Comments 2
Rustler
Level 15

How to issue a credit memo to a Customer for an expensed Products/Services? The credit will be applied later as a payment to an invoice.

there is no way to link a vendor and a customer in QB, so that poses an issue.

1. Pay the bill from your vendor using a cash type bank account, that lowers the cash balance.

2. Create a service type item called marketing and link it to the cash type bank account. Use that item on a customer credit memo. Later apply the credit memo to the customer invoice. Linking it to the cash bank account is unusual but what it does is create a deposit equal to the amount paid on the vendor bill resetting the cash balance to its original amount.

Becky7413
Level 1

How to issue a credit memo to a Customer for an expensed Products/Services? The credit will be applied later as a payment to an invoice.

Thank you for your reply! I didn't want to use a bank account but have no choice. The process I'm going to use is similar to what you recommend. The difference is I'm going to use a trust account as a clearing account which will give me better visibility to ensure all credits are recognized properly.

 

1. Create a credit memo using the correct Products & Services which is linked to the trust account Barter – Customer Credit.

         Barter – Customer Credit   $1,000

               Accounts Receivable (A/R)   -$1,000

2. JE to recognize the credit as an expense.

         Samples          $1,000

               Barter – Customer Credit     -$1,000

3. Apply the credit memo to an invoice.

 

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