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  1. A Prepaid Deposit is taken for $100.
  2. A $100 purchase is made.
  3. A $100 payment is made using the Credit Memo established from the order of the prepaid deposit product.

Prepaid Deposit Payment Example

In the second scenario, a credit memo is used to pay for a portion of the order.

Account

Debit

Credit

A/R

$50.00

 

Sales

 

$50.00


The following entries are generated by the credit memo payment:

Account

Debit

Credit

Cash

$50.00

 

A/R

 

$50.00

Account

Debit

Credit

A/R

$50.00

 

Cash

 

$50.00

 

Result

All entries cancel. No GL activity.
This second scenario would normally result in the entries cancelling and therefore not have any GL activity. However, if the A/R accounts are different for the product on the regular order versus the Credit Memo order, only the Cash entries will cancel. This will result in:

Account

Debit

Credit

Credit Memo A/R Account

$50.00

 

Regular Order A/R Account

 

$50.00