MoneyWorks uses the reverse sales invoice (negative invoice) method to record a credit note. It converts the sales invoice into a credit note by clicking on the reverse button on the sales invoice transaction.
Upon converting, it changes the quantity into a negative value, multiplying the unit price to derive a credit amount (negative) if you are using products or services (A negative net amount if you are using a ledger account instead). Of course, you can also manually enter a negative quantity instead of clicking the reverse button to create a credit note.
The credit note debits the sales and credit accounts receivable, which later offset the outstanding invoice.
You have an option of offsetting the credit note with an invoice from the Command menu (via a contra method) or when receiving payment from the customer. Both work, but offset during received payment is preferable (The contra feature is not for contra between a creditor and a debtor owing, but the credit note and outstanding invoice of the same debtor).
Credit Note (a.k.a. negative invoice) shared the same running sequent number as the sales invoice. You may manually change the reference number but try keeping the system-generated number to reduce confusion or mistake.
You can use the invoice form to print the Credit Note by amending the formula of the form tile from a simple text field to an if( ) statement:
It prints as a ‘Credit Note’ when the invoice gross is smaller than $0 and ‘Invoice’ when it is $0 or greater. It helps reduce the number of forms you require to manage, ease the operation and reduce mistake made.
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The overseas supplier, who are not GST registered trader, will not have the GST charges on the invoice. The Customs (or the forwarder may pay on your half) will impose the GST on the imported goods when goods arrived in Singapore.
The exchange rate used in the supplier invoice could be different from the Customs’ exchange rate. You may have received the supplier invoice before receiving goods and could have entered using your in-house exchange rate. Whereas you paid the GST based on the Customs’ exchange rate, convert upon goods arrived in Singapore.
Assuming you paid $700 GST to the Customs based on $10,000 worth of goods. The payments entry in MoneyWorks:
First detail line: Account: Cost of Goods Sold Net: 10,000 GST Code: IM (import GST code) GST amount: 700 Second detail line: Account: Cost of Goods Sold Net: (10,000) GST Code: OP (or *) GST amount: 0.00
(**Check with your accountant on the GST code use).
The Cost of Goods Sold used in the Payment transaction is a dummy account to facilitate the tax calculation. The taxable amount reversed on the second detail line to give a net (tax amount) of 700, which will then capture in the GST report.
The journal for the payment will be: DR. Cost of Goods Sold DR. GST Input CR. Cost of Goods Sold CR. Bank
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Cancel Transaction and Credit Note are both reverse entry but use differently. You use Cancel Transaction for correcting duplicated entry, and a Credit Note for adjusting the account.
It does not delete when you cancel a transaction; instead, it creates a reverse entry to correct it and forms an audit trail for the accountant. Unlike Credit Note, both the cancelled and cancellation transaction does not show on the GST report; therefore, you should not use Cancel Transaction as a shortcut for adjusting the account.
Although the journal behind the Cancellation and Credit Note is the same, the GST treatment is different. Consult your accountant if you are not sure of the method used. Use a Credit Note instead of a Cancellation if you are uncertain.
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