Credit note received after YE
Credit note received after YE
How to deal with a credit note received lets say in FY24 but relates to a purchase I made in FY23? Do I need to adjust the FY23 figures with a provision? What are the journal entries required? Basically the opposite of a sale with right of return lol
Re: Credit note received after YE
Most likely represents conditions at year end, eg incorrect pricing or volume etc, so is an adjusting event. Or is it because of decisions made/arising entirely after year end?
Re: Credit note received after YE
Hey,
its the first one.
its the first one.
Re: Credit note received after YE
Are you an (unhappy) auditor? This is the same reason you would review post year end credit notes in revenue testing.
Re: Credit note received after YE
Yeah. Also tryna understand it from the client's sake when I decide to jump ships and move to industry.
Re: Credit note received after YE
Anyone who might know please let me know! I was thinking if we could recognise a contract asset and credit the expense? Would that be correct?
Re: Credit note received after YE
What's the reason for issuing this credit note?
Re: Credit note received after YE
Hey,
incorrect pricing basically from the supplier's side! They overcharged.
incorrect pricing basically from the supplier's side! They overcharged.
Re: Credit note received after YE
That's a trade receivable on the debit side, or you might need to adjust the trade payable if it's still unsettled at the reporting date. You credit the expense, or the inventory if the items haven't been sold. And this definitely isn't a contract asset.
Re: Credit note received after YE
Oh okay, thank you! I wasn't sure if i should decrease the trade payable since we haven't received the credit note as at year end.
Re: Credit note received after YE
The credit note confirms the correct amount at the year-end.
Re: Credit note received after YE
I see. Just out of curiosity, if we received a refund in the following year due to exceeding the agreed level of custom in the prior year (discount basically) and not because of error the accounting treatment would be the same? Decrease trade payables at year end?
Re: Credit note received after YE
If you knew you had achieved the volume for a discount and the invoices received were pre-discount, I'd recognise the discount in P&L with a corresponding adjustment to payables and then offset it when the credit note was subsequently received