- 1). Review the credit memo to determine the products or invoice for which you received credit. Note on the credit memo the general ledger expense account where you recorded the original invoice expense.
- 2). Match the credit memo with the next invoice received from the vendor that issued the credit memo.
- 3). Prepare a check for the total amount of the new invoice less the amount of the credit memo. For example, if the new invoice is for $100 and the credit memo is $20, prepare a check payable to the vendor for $80.
- 4). Record the total amount of the invoice as an increase to the appropriate general ledger expense account. For example, if the new invoice is for $100 of wallpaper, record all $100 to the "building repair" expense account.
- 5). Record the total amount of the credit memo as a decrease to the general ledger account used to record the original expense that you are receiving the credit on. For example, if the credit memo is for the return of door locks, then record the $20 as a decrease to the "locks & keys expense account.
- 6). Record the amount of the check as a decrease to the checking general ledger account. For example, if the original invoice amount is $100 and the credit memo taken is $20, then record the $80 actually paid to the vendor to the checking account.
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