Creating a Credit Note for Accounts Receivable Pre-Appointment debtors

There are several ways, to reverse an accounts receivable (pre-appointment) asset.

1. Create a Credit Note
2. Change the Amount Owing

Credit Notes

Unlike accounts payable, you may not relate credit notes to a specific accounts receivable invoice. Any reversal is against the counterparty supplier as a whole and the specific coding of the reversing credit needs to compliment the coding of the original invoice.

When an Accounts Receivable (Pre-Appointment) asset is created, the journal entry is as follows:

DR Accounts Receivable (Pre-Appointment)
CR Equity: Opening Balance

For Post appointment and Trading Post Appointment debtors use the Equity: Revaluations and Disposals account in the account coding to create the reversal.

In this instance a new (negative) asset is created.

Amending the Amount Owing

An alternative to raising a creditor note is to change the amount owing of the asset. This has fundamentally the same effect as a credit note as a change in the carrying value of the asset creates a reversing journal, however, the reversal is allocated to the same asset as the original invoice.

To change the asset value

1. Navigate to the Accounts Receivable Asset register

2. Open the Accounts Receivable asset

3. Edit the ERV Low amount

This is the carrying amount in the asset register.

4. Save and Exit the Asset

If you have changed the ERV (Low) you will be prompted for a date the adjustment journal entry will be dated. Enter the date of the adjustment (it cannot be before the start date of the job).

The asset has now been revalued and a credit entry has been created.

To view the asset entries

1. Open the asset transaction register

2. From the asset register, right click on the asset

3. Select the Realisations menu option

The asset register appears. You should see the adjustment entry.