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Refund Order / Internal Fund Transfer in AR [message #207927] Thu, 07 December 2006 07:05 Go to next message
hitenm
Messages: 18
Registered: November 2006
Location: Mumbai
Junior Member
Case 1 :
A Gives 100 Rs Prepayment(Advance) to B.
B raises an invoice for payment against that advance for 50 Rs.
B refunds the remaining 50 Rs. How would that be recorded in AR so that the initial transaction of 100 Rs is marked off.

Case 2 :
There is a site office of a company who makes payment to 'A' supplier. Now they need to be reimbursed for that much amount by their Head Office. In other words it is an internal transfer btn HO Bank to Site office bank. How this transaction should be done in AP and AR.

Kindly guide stepwise( dr memo/credit memo , then matching , etc)

Really appreciate the inputs..

Thanks and Regards,

Hiten

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Re: Refund Order / Internal Fund Transfer in AR [message #210063 is a reply to message #207927] Tue, 19 December 2006 03:29 Go to previous message
hitenm
Messages: 18
Registered: November 2006
Location: Mumbai
Junior Member
Now that no one has replied and i got the answer from other source, lemme share it with you....Hope it helps....

Case 1:

1) This transaction needs to be made in AP as B becomes your supplier.

2) Make a Prepayment to B for Rs.100/-

3) Book the Invoice of Rs.50/- submitted by B, with this there will be an advance of Rs.50/- lying in B’s a/c.

4) When B refunds Rs.50/- book a standard invoice in AP but in Distribution give the Clearing A/C (which is not an expense a/c but will be used only for settlement

of this kind of Entries) match the prepayment to this invoice. With this the entire advance given to B will get adjusted.



5) Now the amount of Rs.50/- need to be entered in your Books, as the check will be deposited in Bank.



For this you need to book a Journal entry as follows



Bank A/C Dr Rs.50/-



To Clearing A/C Rs.50/-



6) With this Journal Entry the clearing a/c which was debited in AP through a standard invoice will be nullified & B’s a/c also will get adjusted.





Case 2:



1) This transaction can be handled in GL directly



2) Basic assumption: Site Office & HO is taking separate Trial Balances with the same chart of account, i.e. Site Office & HO are two different operating units under one Legal Entity.



3) Site Office will make payment to supplier ‘A’ through AP.



4) In HO books one Journal Entry needs to be passed



Clearing A/C of Site office Dr (Segment/ Operating Unit to be selected as Site Office)

To Bank a/c (HO Bank)



5) In Site Office one Journal Entry needs to be passed

Bank a/c Dr

To Clearing a/c Cr

This entry will knock off debit given by HO & site office Bank a/c will get updated.

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