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Program Description:

A debit memo is a charge against a vendor's account (Debit A/P). In the system it is treated pretty much like an prepayment. The major difference is that a check doesn't have to be printed to affect the vendor's account balance.

For example, you may bring some merchandise to a tour operator, instead of paying in cash. The amount which the vendor values the merchandise is the amount of the debit memo.

A frequent use for debit memo entry is to correct errors in estimates or invoices after they have been posted to A/P.

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Program Operation:

To start a new debit memo, type zero. To change a current debit memo, type the entry number. Partially distributed debit memos may not be changed.

Then, enter the Vendor number and the Debit Description and amount. If the debit memo is in a currency other than U.S. dollars, then you will be asked for the USD amount. This is the amount posted to the General Ledger. Next, enter the A/P number to debit (Defaults to Vendor's default) and the account to Credit (defaults to the prepayment default).

Note: To enter a negative amount against a tour, use invoice entry and type a negative amount (For a credit invoice).

Note: Internally, debit memos are treated the same as prepayments. You must use the prepayment distribution program to distribute the amounts to specific invoices.

G/L entries are created automatically:

1/15/86 Accounts Payable - Tours 500.00

Flight bag expense (decrease) 500.00

(Gave flight bags to tour operator)

This program is also used to fix estimates and invoices after they have been posted to A/P. You can zero out the incorrect invoice by distributing a debit memo to it.

For example, say you enter a departure estimate for 910.00 rather than 190.00 and you didn't catch it on the edit list. To fix it, enter a fake invoice for the 910.00, enter a debit memo for 910.00 and then distribute the debit memo to the invoice to cancel it out. Go back and enter the correct departure estimate. (Usually you wouldn't go through all this trouble for an estimate. You would only do it for an incorrect invoice)

The entry from the debit memo posting would be:

4/12/86 Accounts Payable - Tours 910.00

Cost of Tours 910.00

(Reverse incorrect entry)