Vantage V 6.10
We don't have an accountant here, I'm the IT Manager with additional
accounting responsibilities, so forgive my ignorance - I know just
enough to be dangerous.
Our Returns & Allowances account 41100 seems to be overstated due to
the way things are set-up. When a customer sends back an item, we
usually issue a credit memo, repair the parts, and ship and re-
invoice.
As a result, our Sales Reenue account gets credited twice, once upon
initial shipment and again after the repair. In addition, the Returns
& Allowances account is credited when the RMA is processed.
On my income statement, the Total Sales is correct because the
Returns & Allowances offsets the amount, but an individual Sales
Account is effectively doubled for every return. Example
Upon original ship and invoice:
-Sales-Cable Assemblies goes up $1,000
-AR goes up $1,000
We issue credit memo:
-AR goes down $1,000
-Returns & Allowances goes up $1,000
We repair and re-ship an re-invoice:
-Sales-Cable Assemblies goes up $1,000
-AR goes up $1,000
The net result is that Sales-Cable Assemblies looks like $2,000
(though it is really only $1,000 in actual sales). This is offset by
the negative amount of $1,000 in Returns and allowances. On my income
statement, Sales-Cable Assemblies is overstated by $1,000, but Total
Sales is correct.
Also, the Returns account is much higher than the amount of product
that is actually returned and retained, and is not useful as a
measure of what is happening.
It seems to me that we should be using a different account when the
reworked item is sent back. Do you agree? Should this be done via a
Product Group that would Credit Returns & Allowances and selected in
the sales order?
Thanks in advance,
Randy Weber
IT Manager
TLC Electronics
We don't have an accountant here, I'm the IT Manager with additional
accounting responsibilities, so forgive my ignorance - I know just
enough to be dangerous.
Our Returns & Allowances account 41100 seems to be overstated due to
the way things are set-up. When a customer sends back an item, we
usually issue a credit memo, repair the parts, and ship and re-
invoice.
As a result, our Sales Reenue account gets credited twice, once upon
initial shipment and again after the repair. In addition, the Returns
& Allowances account is credited when the RMA is processed.
On my income statement, the Total Sales is correct because the
Returns & Allowances offsets the amount, but an individual Sales
Account is effectively doubled for every return. Example
Upon original ship and invoice:
-Sales-Cable Assemblies goes up $1,000
-AR goes up $1,000
We issue credit memo:
-AR goes down $1,000
-Returns & Allowances goes up $1,000
We repair and re-ship an re-invoice:
-Sales-Cable Assemblies goes up $1,000
-AR goes up $1,000
The net result is that Sales-Cable Assemblies looks like $2,000
(though it is really only $1,000 in actual sales). This is offset by
the negative amount of $1,000 in Returns and allowances. On my income
statement, Sales-Cable Assemblies is overstated by $1,000, but Total
Sales is correct.
Also, the Returns account is much higher than the amount of product
that is actually returned and retained, and is not useful as a
measure of what is happening.
It seems to me that we should be using a different account when the
reworked item is sent back. Do you agree? Should this be done via a
Product Group that would Credit Returns & Allowances and selected in
the sales order?
Thanks in advance,
Randy Weber
IT Manager
TLC Electronics