So what do you do? Say the initial invoice was for 1,200 and now it turns out that your supplier was wrong and the actual amount should be 1,100. As such, they\u2019re issuing a credit invoice.\u00a0<\/p>\n
This is how you\u2019d treat the situation:<\/p>\n
–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0If the invoice was for goods still in your inventory, you simply decrease the cost in inventory on your balance sheet and also decrease the payable to supplier with the same entry (Db Supplier payables 100 and Cr Inventories 100);<\/p>\n
–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0If the invoice was for goods already sold (but still unpaid to your supplier), you\u2019d decrease the payable just the same, but since it\u2019s sold and no longer in your inventories, you ought to decrease the cost of goods sold on the income statement (Db Supplier payables 100 and Cr Cost of goods sold 100);<\/p>\n
–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0If the invoice is for some other expense already charged to the income statement, you\u2019d act similarly to the previous situation \u2013 by decreasing the payable and the expense (Db Supplier payable 100 and Cr Expense account 100).<\/p>\n
It is important to understand that supplier credits are a common sight and as always, it\u2019s just about treating them properly. The general idea behind each credit invoice is ensuring it decreases appropriate accounts (i.e. always the accounts the initial amount was charged to).<\/p>\n","protected":false},"excerpt":{"rendered":"
So what do you do? Say the initial invoice was for 1,200 and now it turns out that your supplier was wrong and the actual amount should be 1,100. As such, they\u2019re issuing a credit invoice.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-5011","post","type-post","status-publish","format-standard","hentry","category-1-7-basic-entries"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5011"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5011\/revisions"}],"predecessor-version":[{"id":5012,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5011\/revisions\/5012"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5011"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}