Credit note to reduce balance owing to a supplier

Accounting
1

I need to find a way to handle the situation whereby a suppler was provided with a service for which a credit needs to be posted as a contra against this outstanding balance.

Two invoices were received amounting to £137.80. A payment of £87.80 was made leaving a balance of £50 against which a credit note needs to be posted and allocated to an entirely different nominal account. I have struggled to resolve this for a few months now and looked at some of the responses to questions raised by other users but none quite match the situation that I find myself in.

Thanks in advance for any help/advice provided.

No sure if the link below will display the screen shot of the supplier account.

849×304 6.4 KB

2

Hi @anfiuk

When you say that the £50 that’s outstanding needs to be assigned to a completely different nominal, what type of nominal is this? Is it, a sales nominal for example to counteract work you’ve done for them?

3

The nominal that I wish to use is a profit and loss expenditure nominal account. Here is the background.

We held and AGM in April which included an evening meal and most of the participants paid for this in advance however, one member asked that the cost be deducted from the expense claim that was to follow. In the account system that I current run (I am running Quikfile in parallel) I posed £50 the credit to the purchase ledger account for the individual. When the invoice for expenses was received the payment was made matching the credit note and invoice so reducing the payment to zero the account balance. In this situation the nominal account (AGM expenses) happened to be the same one used for the invoice and the credit note but this might not always be the case.

Thank you for a fast response, as ever.

4

What I would do here is issue a credit note against that purchase invoice and select the option “Reduce unpaid balance”.

Now in the credit note screen you will be able to allocate the amounts to a different nominal account.

809×229 12.8 KB

Once you’ve saved this Credit Note the balance on the supplier account will be reduced to zero and the credit note will have posted to a different nominal code than the original purchase.

I hope I have understood the situation correctly, let me know if you have any doubts.

5

Thank you for this advice Glen. From reading other community comments I arrived at the first stage to Reduce unpaid balance but backed off as the logic of this failed me. I suppose that being used to posting a credit using the same process, in reverse, in my current system threw me off track. Not intuitive I feel but it has resolved the issue.

Thanks again and for the very prompt response to my question.

1 Like