Processing a Supplier Refund on Credit Note (Standard VAT Accounting)

1. On the supplier, account raises an invoice for the gross amount with a T9 tax code to the suspense nominal account (9998).
2. Go into Bank> Allocate credit notes to invoices and allocate the credit note to the open invoice. This will clear the supplier account.
3. Enter a bank receipt for the gross amount with a T9 tax code to the suspense nominal account (9998).
   • For this example, we are going to assume the credit note is 120 (100 + 20 tax), then we would propose the following. Do the following:
4. On the supplier, account raises a purchase invoice for 120 with the same tax code as the Credit Note and post it to the suspense nominal code (9998).
5. Go to Bank -> Allocate Pending Payment and Credit Notes to Invoice, select the supplier and both the invoice and the credit note will appear. Enter the full value against each line item.
6. Go to Bank -> Receipt and enter a receipt for 120 with the same tax code as the Credit Note and post it to the suspense nominal code (9998).

Once you have done the above, the supplier account balance will be zero and the money will show coming into the bank account.

The above assumes that you are on Standard VAT Accounting, if you are on Cash Accounting then the two transactions should be entered into the relevant tax code/amounts.