Credit Memos: Account Movements (SAP Library - MM Invoice Verification and Material Valuation)

Credit Memos: Account Movements

In the SAP System a credit memo reverses an invoice entry. In the same way as the system assumes that a corresponding goods receipt took place or is to take place for an invoice, the system assumes that a credit memo represents the reversal of a goods receipt. The credit memo is settled using the GR/IR clearing account.

The account postings made for a credit memo depend on the goods receipts and invoices already posted.

The account postings are made according to the following rules:

When determining the account postings, the system considers the following:

the credit memo amount
the total amount posted to the GR/IR clearing account when the invoices were entered (clearing value)
the total amount posted to the GR/IR clearing account when the goods receipts were posted (GR value)
the credit memo quantity
the total quantity invoiced (IR quantity)
the total quantity delivered (GR quantity)

If the IR quantity is larger than the GR quantity, the credit memo quantity is divided into the quantity that is covered by the excess invoice quantity and the remaining credit memo quantity.

In the case of the quantity that is covered by the excess invoice quantity, the following value is calculated:

Quantity * (clearing value - GR value) : (IR quantity - GR quantity)

The following value is calculated for the remaining credit memo quantity:

Quantity * GR value : GR quantity

The total of these values is posted to the GR/IR clearing account.

If the IR quantity does not exceed the GR quantity, the following value is calculated for the credit memo quantity:

Quantity * GR value / GR quantity

This value is posted to the GR/IR clearing account.

The credit memo amount is posted to the vendor account.
If the credit memo amount varies from the GR/IR posting, the difference is posted to the stock account or a price difference account, depending on the price control defined for the material.

Example

The following example shows the account postings made when you post a credit memo after several goods and invoice receipts for a material with moving average price control.

This graphic is explained in the accompanying text

At the first goods receipt, $880 is posted to the GR/IR clearing account. The corresponding amount for 60 pieces is cleared with the first invoice. When the second invoice is entered, the GR/IR account still contains $220 for 20 pieces. This is cleared and the remaining 20 pieces are posted with the invoice price: 20 x 13.70 = $274. The next goods receipt is also valuated with the invoice price of $13.70/piece.

When you post the credit memo, there is still an excess invoice quantity of 10 pieces. This is multiplied by the difference between the clearing value (660 + 494 = 1154) and the GR value (880 + 137 = 1017) and then divided by the difference between the IR quantity (100) and the GR quantity (90). The remaining credit memo quantity of 50 pieces is multiplied by the GR value and then divided by the GR quantity. The result is the amount that is posted to the GR/IR clearing account when you post the credit memo.

After you post the credit memo, there is a balance of $565 on the GR/IR clearing account. This means that the system still expects an invoice for a goods receipt of 50 pieces. When the invoice is posted, the balance is then cleared.