Cash Refunds
If you refund moneys to a cash accounting customer, it's important to do the opposite of what was done when the payment was received (i.e., you need to transfer the payable back to the holding account). The following example should help clarify this situation (this example shows a refund due to a credit balance that occurred as a result of a cancel/rebill).
|
Event |
GL Accounting |
Tax Payable Balance |
Tax Holding Balance |
SA's Payoff Balance |
|
Bill segment created |
A/R 110 Revenue <100> Tax Holding <10> |
0 |
(10) |
110 |
|
Payment received |
Cash 110 A/R <110> Tax Holding 10 Tax Payable <10> |
(10) |
0 |
0 |
|
Cancel |
A/R <110> Revenue 100 Tax Holding 10 |
(10) |
10 |
(110) |
|
Rebill |
A/R 27.50 Revenue <25> Tax Holding <2.50> |
(10) |
7.50 |
(82.50) |
|
Payment refunded (via an A/P adjustment) |
Cash <82.50> A/R 82.50 Tax Holding <7.50> Tax Payable 7.50 |
(2.50) |
0 |
0 |
We understand this is tricky, but consider this - when a cash accounting customer makes a payment, the system transfers tax holding CREDIT balances to tax payable distribution codes in proportion to the amount of the receivable DEBIT amount that was reduced by the payment. Therefore, when cash is returned to the customer, the system should transfer tax holding DEBIT balances to tax payable distribution codes in proportion to the amount of the receivable CREDIT that was reduced by the refund.
The above takes place when an A/P adjustment is created if the related adjustment type references the appropriate FT algorithm (refer to ADJT-AC and C1-FTGL-ADAC for a description of the adjustment FT algorithms used for adjustments that behave like payments).