Sie sind auf Seite 1von 69

How to apply a Credit Memo to a Prepayment

in Payables?
Version 12.1
www.ivruksha.com
ivruksha@gmail.com
Detailed Business Scenario:

Client XYZ has planned to procure goods/services worth 1200 USD from a
supplier, they have an existing Credit memo in the system amounting to 200 USD.
As per the terms of the Supplier, advance payment needs to be done before
delivery of goods/services, hence XYZ made an advance payment of 1000 USD
instead of 1200 USD, since there is a Credit Memo available for the difference
which was intimated to the supplier, and mutually agreed.

In short,
Advance Payment is 1000 USD
Credit memo is 200 USD
Actual Invoice is 1200 USD

Now how to perform the above in Oracle Financials ??
www.ivruksha.com
Step 1 Create a Prepayment Invoice for 1000 USD

Step 2 Make payment to Prepayment Invoice for 1000 USD

Step 3 Create a Standard Invoice for 1200 USD

Step 4 Create a Credit Memo for 200 USD and match to the Standard Invoice

Step 5 Apply Standard Invoice to the Prepayment

Step 6 Knock off Standard Invoice and Credit Memo by creating Zero
Payment

Step 7 Create Accounting and Review the entries
Steps for handling the Business Scenario in Oracle Payables
www.ivruksha.com
Step 1

Create a Prepayment Invoice for 1000 USD
www.ivruksha.com
Switch responsibility to Payables
www.ivruksha.com
Navigate to Invoices > Entry > Invoices
www.ivruksha.com
Create Prepayment Invoice for 1000 USD
www.ivruksha.com
Enter Line level information for the Prepayment Invoice
www.ivruksha.com
Distribution details would be automatically fetched (only for
Prepayment Invoice)
www.ivruksha.com
Validate the Prepayment Invoice Currently it is in Unvalidated Status
www.ivruksha.com
Now the Status is changed to Unpaid
www.ivruksha.com
Step 2

Make Payment to the Prepayment Invoice
www.ivruksha.com
Select the prepayment Invoice and click ACTIONS button
www.ivruksha.com
Select Pay in Full option and click OK
www.ivruksha.com
Enter the mandatory information required to complete the Payment
www.ivruksha.com
Now the status is changed to Available
www.ivruksha.com
Step 3
Create Standard invoice for 1200 USD for the same Supplier
www.ivruksha.com
Create Standard Invoice for 1200 $
www.ivruksha.com
Enter the Line level information for the Standard Invoice
www.ivruksha.com
Enter the Distribution level information for the line
www.ivruksha.com
Click Actions button
www.ivruksha.com
Validate the Invoice
www.ivruksha.com
Invoice Status is now Validated
www.ivruksha.com
Step 4
Create Credit Memo for 200 USD and match with the
Standard Invoice for the same Supplier
www.ivruksha.com
Create Credit Memo for 200 USD
www.ivruksha.com
Select the Match Action as Invoice and click Corrections button
www.ivruksha.com
Below screen would appear ..
www.ivruksha.com
Select/Enter the Invoice Number for which this Credit Memo is created
www.ivruksha.com
Below Screen would appear
www.ivruksha.com
Click on the select Checkbox
www.ivruksha.com
Enter the amount for which Credit Memo is created and click Correct button
www.ivruksha.com
System would display the below NOTE.
www.ivruksha.com
Changes are Saved
www.ivruksha.com
Click Lines TAB
www.ivruksha.com
Line Level information is automatically entered .
www.ivruksha.com
Distribution Level is automatically entered .and the account codes are
populated from Standard invoice
www.ivruksha.com
Validate the Credit Memo
www.ivruksha.com
Credit Memo is now Validated
www.ivruksha.com
Step 5
Apply Standard Invoice to the prepayment Invoice
www.ivruksha.com
Select your Standard Invoice and click Actions button
www.ivruksha.com
Select Apply/Unapply Prepayment checkbox and click OK
www.ivruksha.com
The available prepayments are displayed.
www.ivruksha.com
Select the Prepayment and apply the amount Amount to Apply should be your
Standard Invoice Value Credit Memo value, in our case it is 1200 200 = 1000 USD,
hence I have stated that amount in the field
www.ivruksha.com
Click Apply/Unapply button
www.ivruksha.com
Prepayment is now applied .
www.ivruksha.com
The standard Invoice now requires revalidation, click Actions button
www.ivruksha.com
Select validate and Click OK
www.ivruksha.com
Step 5
Pre-requisite for Knocking off remaining Standard Invoice
Balance and Credit Memo
www.ivruksha.com
Navigate to Setup > Payment > Bank Accounts.
www.ivruksha.com
Select your Bank Account and click GO button
www.ivruksha.com
Select your Bank Account from the query results..
www.ivruksha.com
In the Payables Controls region, make sure Allow Zero
Payments option is set to YES.
www.ivruksha.com
Step 6
Create a Payment ..
www.ivruksha.com
Navigate to Payments > Entry > Payments
www.ivruksha.com
Make a payment for Zero amount and click on Enter/Adjust Invoices button
www.ivruksha.com
Click on the LOV button in order to select the Invoices
www.ivruksha.com
I am selecting the standard Invoice amount which has 200 USD due, to be
paid to the supplier
www.ivruksha.com
Insert another row and click on the LOV button ..
www.ivruksha.com
Now select the Credit Memo and click OK
www.ivruksha.com
Now the summation of Invoice and Credit Memo amounts to Zero
www.ivruksha.com
Save the Payment .
www.ivruksha.com
Step 6
Review Accounting and Transactions
www.ivruksha.com
There is no Amount remaining for the Credit Memo
www.ivruksha.com
There is no Amount remaining for the Standard Invoice
www.ivruksha.com
There is no Amount remaining for the Prepayment
www.ivruksha.com
Accounting Entries for Prepayment Invoice
Accounting Entries for Payment made to Prepayment Invoice
www.ivruksha.com
Accounting entries for Credit Memo
Accounting entries for Standard Invoice with Prepayment Applied
www.ivruksha.com
When Prepayment Invoice got created, below accounting entry was generated :
Debit 01-000-1340-0000-000 ( Prepaid Expenses) 1,000
Credit 01-000-2210-0000-000 ( AP Liability ) 1,000
When Standard Invoice got created, below accounting entry was generated :
Debit 01-000-7740-0000-000 (Actual Expenses) 1,200
Credit 01-000-2210-0000-000 ( AP Liability ) 1,200
When Credit Memo Invoice got created, below accounting entry was generated :
Debit 01-000-2210-0000-000 ( AP Liability ) 200
Credit 01-000-7740-0000-000 (Actual Expenses) 200
When Standard Invoice applied to Prepayment, below accounting entry was generated :
Debit 01-000-2210-0000-000 ( AP Liability ) 1,000
Credit 01-000-1340-0000-000 ( Prepaid Expenses) 1,000
When prepayment Invoice was paid, below accounting entry was generated :
Debit 01-000-2210-0000-000 ( AP Liability ) 1,000
Credit 01-000-1110-0000-000 ( Cash / Cash Clearing) 1,000
Net Entry after knocking off others
Review of the entire set of Accounting entries generated by the system
www.ivruksha.com
Conclusion:
It is not possible to apply a credit memo to a prepayment transaction, which is a system
restriction. Hence we are to make sure the balances of standard invoices and credit memos
are adjusted in such a fashion, that without the need of applying credit memo to the
Prepayment Invoice, we should settle the transactions.
This workaround has been suggested by Oracle.

References:
1078938.6 - How do you apply a prepayment to a standard invoice and a credit memo?

www.ivruksha.com