Assume for this example that a Prepaid Liability account is configured as the AR account in the prepaid deposit product. This following example shows the resulting GL Entries from a transaction that does the following:
- A Prepaid Deposit is taken for $100.
- A $100 purchase is made.
- 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 |