Credit Memos and Adjustments

You will, at times, need to process the return of goods or make other adjustments to your sales transactions. Because adjustments to sales transactions affect the taxable amount, you include credit memos and other adjustments in the EU sales list report.

When you process a credit memo (also called a credit note) for a sales return or another type of adjustment, the system generates a record with a document type of RM (credit memo), or the document type that you set up to identify credit memos. When the Data Extraction for ESL program selects these transactions, it also identifies the original sales transaction, and stores information about the original transaction in the Original Transaction Detail for Data Extraction table (F740018O). If you set a processing option in the VAT EU Sales List program, the system prints the original transaction order number, original invoice date, and original GL date on the EU sales list report when you print the report in detail.

To assure data integrity, all invoices that are linked to a credit memo for a single receipt must be in the same reporting period. The credit memo must be matched to a paid invoice. The reporting period can be the period in which the original transaction is processed, or in reporting period other than the period in which the original transaction is processed.

The extraction program includes sales transactions with multiple adjustments, including adjustments that are outside of the reporting period, if you use a separate receipt for each adjustment. The extraction program does not include adjustments to sales transactions if you use a single receipt for adjustments that are in more than one period. For example, suppose that you have a receipt for a sales transaction for May, and you associate one credit memo to the receipt in May, and associate a second credit memo to the receipt in June. Because you associated credit memos from two different periods (May and June) to a receipt, the extraction process does not write the records for the sales transaction or the credit memos to the F740018O table.