Zero-dollar bills don’t seem to be worth much; but they’re handy for some transactions. It’s a good tool to have in your belt.
Let’s say you purchased an item for a job; the charge has already been applied to the job; and then you discover a defective item. You receive a credit from your vendor; but how do you record all of that correctly?
A simple deposit of the refund won’t credit the job properly. Here’s how to get it all recorded:
- Create a bill for the vendor.
- List an expense with your bank account as the expense account or category. (Stay with me here. This creates the cash deposit to your account.)
- Now we list an item. (Trust me.) Make the dollar amount negative. Be sure to note the customer job; this will adjust the charges for the job.
- The bill amount should now be zero. The bank account will show the deposit, and the charges to the job have been adjusted.
- **If your software forces you to enter a quantity for the item you will have to make an inventory adjustment. The item would have been removed from inventory during the initial billing to the customer; it was not returned to inventory when we received the refund. Your inventory count should remain as it was before we created this bill.
This neat little trick can be used in a variety of ways. For instance, if there’s no need to list an item just use two expense entries. Have fun with your zero-dollar bills! And be nice to your bookkeeper.