The following examples demonstrate the GL entries made for a normal $100.00 order and payment (Scenario #1) and the GL entries made for an order using a prepaid deposit (Scenario #2).
Normal Payment Transaction Example
In this example, the order process is done in the "normal" method. A customer places an order for items totaling $100.
|
Account |
Debit |
Credit |
|
A/R |
$100.00 |
|
|
Sales |
|
$100.00 |
A payment is received for the order, in the amount of $100. The following GL Account entries are created to recognize the payment for the order:
|
Account |
Debit |
Credit |
|
Cash |
$100.00 |
|
|
A/R |
|
$100.00 |
The order and payment transactions result in the cancellation of the A/R GL entries and cash and sales balance of $100.00 each, respectively.
Prepaid Deposit Example
In the second scenario, a credit memo is used to pay for a portion of the order.
|
Account |
Debit |
Credit |
|
A/R |
$50.00 |
|
|
Sales |
|
$50.00 |
The following entries are generated by the credit memo payment:
|
Account |
Debit |
Credit |
|
Cash |
$50.00 |
|
|
A/R |
|
$50.00 |
|
Account |
Debit |
Credit |
|
A/R |
$50.00 |
|
|
Cash |
|
$50.00 |
Result
All entries cancel. No GL activity.
This second scenario would normally result in the entries cancelling and therefore not have any GL activity. However, if the A/R accounts are different for the product on the regular order versus the Credit Memo order, only the Cash entries will cancel. This will result in:
|
Account |
Debit |
Credit |
|
Credit Memo A/R Account |
$50.00 |
|
|
Regular Order A/R Account |
|
$50.00 |
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