If you didn’t involve a liability account initially, the remaining credit on
the credit note would sit in AR. But if you ‘paid’ the credit note with a
liability, you transferred that amount from AR to the liability, which is the
account you will ‘pay’ future invoices from when offsetting with the credit.
Be mindful that the credit note should have been posted to AR initially.
Also that the credit note’s line items should have all been assigned to some
income account, NOT a liability account. You want to decrease your income
accounts with a credit note that the original invoice(s) increased.
Here’s a simplified transaction walk through:
Original Invoice
-----
Dr. Accounts Receivable $1000
Cr. Income $1000
Original Payment by check
-----
Dr. Undeposited funds $1000
Cr. Accounts Receivable $1000
Depositing of check
-----
Dr. Checking $1000
Cr. Undeposited Funds $1000
Issuance of Credit Note
-----
Dr. Income $100
Cr. Accounts Receivable $100
IF you ‘pay’ (transfer) the credit note with a liability account
-----
Dr. Accounts Receivable $100
Cr. Customer Deposits $100
When you offset a future invoice with the liability
-----
Dr. Customer Deposits $100
Cr. Accounts Receivable $100
OR if you don’t involve a liability account at all, offsetting a future invoice
-----
Dr. Accounts Receivable $100
Cr. Accounts Receivable $100
(in this case the money doesn’t move accounts, but gets ‘assigned’ to a
different document, from the credit note to the invoice)
Regards,
Adrien
> On Jul 3, 2019, at 12:15 AM, Eric Rathhaus (general) <rathhaus_...@yahoo.com>
> wrote:
>
> Hi again - so everything worked the first time. I back off all the
> transactions and put the credit note in the AR account, selected two invoices
> and the credit note , credit note reduced by that amount and the payments
> showed. But I need to run another offset and the credit note no longer
> appears in the AR account. The system moved it to a liabilities account and
> automatically opens the liabilities account when processing a payment for
> that company. Is this how it should work?
>
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