How Credit Memo Distributions Are Calculated

When you credit a transaction and create a credit memo, this assigns a revenue and tax account to each credit memo line and generates corresponding default distribution amounts.

Use the Distributions window to review and update the account assignments for credit memo and tax lines.

If the transaction you're crediting has associated freight charges, you can also update credit memo freight distributions, unless the credit memo transaction type has Allow Freight set to No or you have specified a standard memo line of type Tax.

You can directly update account assignments that haven't posted. If you update an account assignment that has already posted, Receivables doesn't change the original assignment but instead creates two new account assignments:

• The first assignment offsets the original posted account assignment.

• The second assignment records the new amount or account that you have updated.

Settings and Documents That Affect Credit Memo Distributions

These settings and documents affect the calculation and display of credit memo distributions:

• AutoAccounting: Account assignments differ depending on whether AutoAccounting depends on salesperson to determine the segment values.

• Invoice Accounting Used for Credit Memos profile option: If this profile option is set to Yes, credit memo accounting is derived from the accounting of the invoice being credited.

• Standard credit memo or on-account credit memo: On-account credit memos depend on AutoAccounting to derive account assignments. Standard credit memos depend on AutoAccounting and the setting of the Invoice Accounting Used for Credit Memos profile option.

• Credit memo revenue reversal rule: This rule affects account assignments on standard credit memos with revenue scheduling rules.

How Credit Memo Distributions Are Calculated

AutoAccounting assigns a revenue and tax account to each credit memo line. The calculation of the default distribution amount allocated to each account assignment varies depending upon the related documents and settings.

If this is an on-account credit memo, the default amount is the credit memo line amount, where AutoAccounting for the revenue account doesn't depend on salesperson. If AutoAccounting does depend on salesperson, Receivables creates multiple account assignment lines, with one line for each salesperson equal to the amount of the salesperson line.

If this is a standard credit memo against a transaction, then the default amount depends on the setting of the Invoice Accounting Used for Credit Memos profile option:

• If the Invoice Accounting Used for Credit Memos profile option is set to No, the default amount is calculated using AutoAccounting in the same manner as on-account credit memos.

• If the Invoice Accounting Used for Credit Memos profile option is set to Yes, and the transaction doesn't use a revenue scheduling rule, the default amount is an amount from the corresponding invoice distribution line using the formula: Amount = (Credit Memo Line Amount/Invoice Line Amount) * Invoice Account Assignment Amount.

• If the Invoice Accounting Used for Credit Memos profile option is set to Yes, and the transaction uses a revenue scheduling rule, the default amount is calculated according to the setting of the credit memo revenue reversal rule.

  Note:

  You must run Revenue Recognition before you can review and update distributions on credited transactions with revenue scheduling rules.