I would like to know how to pass entry for RMA (RETURN MATERIAL AUTHORIZATION)?
We sell a computer component to our client and if its faulty, they send it back to us for replacement or repair.
We then send the faulty component to our vendor for replacement or repair.
And in the meantime, if we have the same component in stock, we will send that component to our client
and when the repaired / replaced component comes back from our vendor, it will be as our stock at hand.
Now, how do i pass the entry for the same:
Inventory came back from Client
Inventory send to our Vendor
Existing Inventory send to Client as replacement
Inventory came back from our Vendor.
Also, some time we detect the faulty Inventory before sales and we send for RMA to our Vendor.
How this will be entered in Manager?
No - Your Credit Note and Debit Note need to contain values as well, not just quantities.
When your Client returns the book, you need to Credit them 1000, as they now only have 4 books.
If you don’t have any more in stock, so you can’t replace the item then the client shouldn’t pay 5000.
If you do send a replacement then the Sales Invoice for 1000 cancels out the Credit Note
Same with the Supplier, the Debit Note should be for the purchase value of the book.
If the Supplier can’t repair or replace the item then you will owe the Supplier less money.
If the Supplier does replace then the Purchase Invoice cancels out the Debit Note
In both the cases, the payment is done to the vendor and the money is received from the customer before detecting the faulty inventory.
And we always get a replacement from a vendor. Same way, we always provide replacement to our customers.
So in either case, New Sales Inv and Purchase Inv needs to be created?
Then, how should i go about the payment transaction for both when the money is received and paid in full?
If both the Supplier and the Customer have fully paid, then the outstanding balances are zero - ok
Step 1
The customer returns the product and you issue a credit note - Customer now has a negative balance
(because the customer has now overpaid - purchased 5 but only has 4)
Step 2
Send the Customer a replacement product with a Sales Invoice - Customer now has a zero balance
(because the customer has now purchased 5 and received 5)
So no payment is required - the Sales Invoice is cancelled out by the Credit Note
If you have the replacement item in stock and is dispatched the same day then you could possibly ignore the paperwork, but if there is going to be a time delay between receiving and returning then the paperwork helps to keep track of events.
The same 2 step process applies when returning products to the Supplier, except its a Debit Note
The Debit Note informs the Supplier who is returning the product, how many and the reason
Original Invoice - Customer purchases 5 and pays for 5 - 5000
Faulty Product Returned - Credit Note issued for 1 and for 1000
Customer now only has 4, but has paid for 5 - 5000 and has Credit Note for 1 - (1000) ='s 4000
So if “no” replacement was sent then Customer could either be
a) refunded via Spend Money, or
b) have credit balance to use against the next purchase
If a replacement was sent then the Customer would have purchased/paid for the original 5 - 5000
Have received a Credit Note for 1 - (1000) and a Sales Invoice for 1 - 1000
The Credit Note is then used to pay off the 2nd Sales Invoice
Oh yes. I am sorry i didn’t work out the test files with entering the amounts, that’s why wondered if the new sales inv (for replacement of the faulty Inventory) will show paid in full or no.
Looks good but can I suggest that when processing the Credit Note, you leave the Credit field blank, as the Invoice has already been fully paid in cash.
You would only use the Credit field if the invoice selected still had an unpaid balance. You will still get the same result but will eliminate those extra entries titled (1) Overpayment and (2) Automatic. The Customer account will look cleaner. Try it out on your test files.
If you observe in the above snapshot, by creating the replacement Sales INV with amount to 1,000/- my total sales also got affected.
As the Original Sales INV is 5,000 which included the 1,000 amount of Inventory.
So by creating the Credit Note and Sales INV with 1,000 amount, My total sales has gone up by 1,000 which is wrong.
That’s why i wanted to have the sales and credit note amount to be at zero as the original sales inv was paid in full and according to our policy we always give the replacement to our customer.
Further to update you, I am passing entries in Manager for past transactions (Data entry) where the Replacement of the faulty inventory was done already to the customer.
I am receiving the replacement from my vendor now is the reason i have to show the stock in.
Keeping the Credit Note and Sales INV amount to zero wont affect the books right???
As the payment was received in full and the replacement was given to the customer as well.
All i had to show in Manager is the Inventory Movement.
Your screen shot is from the Sales Invoices tab so it will only list Sales Invoices and the Credit Notes tab will only list Credit Notes To see the impact on your Sales you need to look at the Inventory - Sales account.
In the above discussions we only used invoices # 5 & 6 where everything worked out ok, so don’t know about this invoice #7. It appears from the Description that it’s a new sale that’s unpaid - so unrelated.
Your credit notes should have reduced sales, as you are reversing part of the Sales Invoice
