This window is available when you press the [Apply Credit] button in the A/P Bills Browse. This button is active only if the selected record is an open credit. In Simple Accounting, an Open Credit is simply a Vendor Invoice with a balance due less than zero. It is indicated in the browse by a PAYMENT STATUS of ‘C’ and is displayed in the color green.

This button opens a window that allows you to apply this credit in either of two ways:

1. By applying the credit as a refund that you enter as a deposit to a bank account.

2. By applying the credit to an open invoice (with a Payment Status of ‘O’; these are displayed in the color red).

Use this window when you are receiving a cash payment from a vendor whether it is to be applied to accounts payable or not. Do not use this menu if you are trying to void a check already printed or to reverse an A/P invoice (such as a merchandise return). Remember: This is strictly for entering cash you are receiving from a vendor.

Cash received from customers should be entered through Customer Payments & Credits.

If you need to transfer money from one bank account to another or deposit capital contributions, go to the Check Register.

Procedure

Apply Credit To Another Invoice

1. If this is a credit you wish to apply to another open invoice select the Apply to an Open Invoice option.

2. Enter the invoice to apply the credit to. Use the field lookup button to select an open invoice.

3. Enter the amount of the Open Credit to use in the AMOUNT field. The default is the total amount of the credit.

Don’t worry if the amount of the Open Credit is greater than the amount of the Open Invoice; Simple Accounting will only apply enough of the credit to close the selected open invoice. You can, therefore, use a single Open Credit to close multiple Open Vendor Invoices.

4. Optionally, enter any discounts you are taking on the Open Invoice to apply to in the DISCOUNT field. This amount plus            the AMOUNT field is the total amount applied to the Open Invoice.

5.  If you need to, change the G/L Account to which the discount should be applied. By default this would be your Purchase   Discount account, however you may choose another account.

You wish to apply a credit from your vendor and close the Bill. The original Bill was for $125.00. However, they send you a refund of $115.00 since the original freight was not refundable. You would then enter the $10.00 discount and apply it to your Freight Expense Account.

6. Enter the date for the Payment Date.

Refunds

1. If this is a refund or other payment you wish to deposit to the bank, select the Deposit In The Bank option.

2. Enter the bank account to deposit to in the BANK ACCOUNTdrop-down-list. The associated G/L account will be debited (increased) by the amount entered in the AMOUNT field. The program automatically defaults to your primary Cash Receipts account. Unless your company makes deposits to multiple bank accounts, leave this as is for all payments.

3. Enter the vendor’s check number from the payment you are receiving.

4. Optionally, enter any discounts you are taking in the DISCOUNT field. This amount plus the AMOUNT field is the total applied to the Open Invoice.

5. Enter the date you are depositing the payment in the PAYMENT DATE field.

Example: You receive payment of $25.00 due to an overpayment you made for an invoice charged as $125.00 and you accidentally sent the vendor a check for $150.00. The kindly vendor has sent back the difference. Enter $25.00 in the AMOUNT field and your COST OF GOODS SOLD account in the ACCOUNT field. Then deposit the money into the bank.

You receive a payment of $300.00 as a rebate for meeting a vendor’s sales quota. This amount is not applied to any particular invoice. This is a two step process:

1·   Enter a vendor invoice for $-300.00 Enter $300.00 in the AMOUNT field and your MISCELLANEOUS SALES REVENUE field in the ACCOUNT field.

2·   Now press the [Apply Credit] button and enter the deposit into your bank account. This clears the invoice from your aging and deposits the money into the bank.

You mistakenly receive payment of $100.00 as a refund from a vendor and wish to apply that to an invoice that has already been closed in A/P. Press the [Apply Credit] button, enter your CoGS account and enter the deposit into your bank account. This cancels the invoice, reverses the CoGS and deposits the money into the bank.

G/L Posting

The entries to the G/L depend on which type of credit you apply:

Deposits to Bank

A credit to A/P for the AMOUNT field

A credit to the ACCOUNT field (if entered)

An offsetting debit to the cash account link to the selected bank account.

Applying Credit to An Open Invoice

A credit to A/P for the AMOUNT field

A credit to the ACCOUNT field (if entered)

An offsetting debit to A/P for the open invoice entered into the INVOICE field.