Credit note from supplier on miscalculated purchase invoice

Hi guys, I have looked though similar topics but i could not apply those situations/methods to my scenario.

This is my case:

  1. I purchased goods from a supplier
  2. they invoiced me for 100,000
  3. however, the actual amount was supposed to be 90,000.
  4. i issued a postdated cheque for 90,000
  5. the supplier then issued me with a credit note for 10,000
  6. as far as our accounting is concerned, i have to record everything as it comes, so the purchase invoice has to be recorded as it is (value of 100,000), my payment as 90,000 and the credit note as 10,000.

both the purchase invoice and cheque payments have been recorded without any issue. I don’t know how to record the credit note of 10,000 without creating a credit/debit imbalance in another account.

What i’ve tried:

  1. journal entry, credit accounts payable (invoice), debit “supplier credits” a/c. (outcome is that the purchase invoice is still outstanding that amount)
  2. journal entry: debit accounts payable (invoice), “credit supplier” credits a/c. (outcome is that the purchase invoice balances out, but creates a credit amount under the supplier, which is also inaccurate)
  3. journal entry: debit accounts payable (invoice), credit “supplier overpayment” (expense) a/c. (outcome is that the purchase invoice balances out, but creates an amount due (negative amount) in supplier overpayment a/c, which is also inaccurate)

My last resort is to adjust the original purchase invoice to amount to 90,000 (as it should have been) and attach all the physical paperwork for the file with a note to state how i got to 90,000.

apologies for the long query, but i’d rather be as detailed as possible.

When you receive Credit note from supplier, it needs to be recorded as a debit note under Debit Notes tab. This is because from your point of view, it is a debit note. I might be changing the terminology as it’s quite confusing.

And that’s it.

Thanks Lubos,
I understood the terminology in the earlier posts i was searching through. I have no issues with that but thanks for the clarification regardless.

So i tried a debit note also. However, what account would i attach the amount to? i can’t access accounts payable so i tried inventory on hand (asset a/c) but it removes the quantity from the inventory. My intention is only for that outstanding amount to be balanced out by the credit note supplied (debit note from my point of view), not to adjust inventory as i havent returned any goods.

apologies if i’ve confused things.

If you purchased inventory items and received credit without returning any back. You should still use Inventory on hand account. Don’t enter anything into Qty field. Just enter unit price 10,000. This will not decrease quantity on hand, only value which is what you want.

Show the screenshot how you are entering this debit note if something is still not clear.

thanks lubus,
this has worked. i attached the amount to inventory on hand (quantity of said product in left blank), and debit the associated purchase invoice

I had initially even tried the debit note feature but i thought i absolutely had to put in quantity of the goods. thanks for clarifying this.

note for anyone else reading this, keep the quantity field blank, don’t put “0” as this will calculate as 0 in the total amount.

My issue has been solved, thank you once agian

This is only if you don’t want to decrease quantity of inventory items, only value.

Normally when you receive credit note from supplier, it is because you have returned back some goods and in that case you would use Qty field.