Understanding Credit/Debit Memos

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Hello, I want to understand how GP handles credit/debit memos.  Please tell me if this is correct:

Credit Memos ALWAYS reduce:

  • In AP they reduce what we owe our vendor
  • In AR they reduce what the customer owes us.

 

Debit Memos ALWAYS increase:

  • In AP they increase what we owe our vendor
  • In AR they increase what the customer owes us.

 

Thanks,

MP

 

All Replies
  • MP,

    You are correct.  The only caveat is AP does not have a Debit Memo Document Type in Great Plains.  Typically you would use the Misc Charge or Invoice to book a debit in AP.

  • Hi Mickie,

    You are correct about the Credit Memos.

    You are correct about the Debit Memos for AR, however "Debit Memos" is not an option with the "Payables Transactions Entry" window.  You would use document types: invoice, finance charge, or misc charge to increase the amount owed to the vendor.

    I find the easiest way to verify my understands about the effects a selection will make to the GL account is to select the desired window and document type enter an amount then view the "distributions".  GP will automatically select the amount as a debit or credit.

    See below for a chart showing the effects in AP and AR depending on the document type.

    AP GL Acct reduce increase
    Document Type Debit  Credit
    Invoice x
    Finance Charge x
    Misc Charge x
    Return x
    Credit Memo x
    AR GL Acct increase reduce
    Document Type Debit  Credit
    Sales/Invoices x
    Debit Memos x
    Finance Charges x
    Service/Repairs x
    Warranty
    Credit Memo x
    Returns x
  • Thank You All!