Refund to Customer

You receive $1000 from customer against an invoice amount of $500. First create a receipt of $1000 and apply to the $500 invoice. Next, contact the customer regarding the remaining $500. You can put the remaining $500 on account and match it to a new invoice but if the customer asks then you might have to refund the extra amount.

Receivable A/C Dr    500
                               Revenue A/C Cr 500
Cash A/C Dr. 1000
                        Receivable A/C Cr 500 
                        Unapplied A/C Cr 500            

11i
By Misc Payment in AR

1. Make a payment outside the system (check /electronic). Create a misc receipt of negative amount that’s paid the customer. The misc cash account should be a clearing account & should be same as the revenue account in debit memo.
Misc Cash Clearing A/C Dr   500
                                     Cash A/C Cr 500

2. Create a debit memo and match the initial receipt of $1000 to this debit memo.
Debit memo accounting
Receivable A/C Dr   500
                               Misc Cash Clearing A/C Cr  500

Receipt Application
Unapplied A/C Dr 500
                               Receivable A/C Cr 500                                 

By Payment in AP
1. Create a debit memo and match the initial receipt of $1000 to this debit memo.
Debit memo accounting
Receivable A/C Dr   500
                               Misc Clearing A/C Cr  500
Receipt Application
Unapplied A/C Dr 500
                               Receivable A/C Cr 500                                 
2. Create an Invoice for the customer (defined as supplier in AP) with the Misc Clearing A/C as the charge A/C
Misc Clearing A/C Dr 500
                                             Supplier Liability Cr 500
3. Make the payment for the invoice
      Supplier Liability Dr 500
                                      Cash A/C Cr 500

R12
1. Create a Receivables Activity with of type= Refund to process your automated AP refund.
You can only have one receivable activity active with type = Refund.

2. Set Receipt Handling for Credits to Refund, this setting is applicable for both automated credit card refunds and automated AP (non-credit card) refunds.

3. For credit memos created via AutoInvoice, Refunds are automated. There is no need for user intervention.
 To create a manual refund, you need to apply the receipt to “Refund”, you can apply to Refund for Receipts which were already remitted.
The Refund Attributes button get enabled, this form is not applicable to Credit Card Refunds. Attribute values are defaulted from payee setup. You are allowed to overwrite the values.

4. Once you Save, an Invoice will be generated in the Payables (AP)
Query the receipts, click on Apply, the Refund Status button will be enabled.When you click on Refund Status button, you will view the refund status in AP.