AR – How to link Customers & Vendors in AR R12 for manual refund

We need to account the money that is paid back (refund) to customer in apps. In 11i we are forced to create customer as a supplier, pass credit memo, prepare invoice manually in AP and issue payment in AP. There is a new functionality to pay back money to customer in R12.

Refund-Amount paid back because of an over collection or the return of goods sold called refund or The reimbursement of the purchase price of a good or service, for reasons such as defective goods or dissatisfaction with the service provided to customer. To do this follow the below mentioned steps:

Step – 1

- Login as Receivables

- Navigate Setup>Receipts>Receivable Activities

-Create Refund Activity

Step – 2

-Navigate>Receipts>Receipts

-Query Receipt & Customer for which refund has to be made

-Click on ‘Apply’

 Step – 3

-It will be directed to the Application window for the Receipt.

-Apply to ‘Refund’ activity. If applied against the transaction, unapply first and apply against refund activity.

-Click on Refund Attributes and provide the details

-Click on ‘Apply’

-Save the record

Sooner we save the record successfully we can see Refund Status button on the bottom

-Click ‘Refund Status’ button. Refund Status is not applicable for Credit Card refund

-We can see the AP Invoice created by the system automatically for the Trading Partner

Step – 4

-Create ‘Receipt Accounting’ in Receivables

-View Journal Entry

Following entry will be made

Debit Cash

Credit Payables Clearing

Step –5

-Now go to Payables

-Navigation>Invoice>Entry>Invoices

-Query the AP Invoice

-System has created payable invoice in AP automatically for Trading Partner

-Approve the Invoice, if Approval Required.

-Create Invoice Accounting in AP

-View Journal entry

Following entry will be made:
Debit Payables Clearing

Credit Liability

Step-6

-Make Payment of Invoice

-Create Payment Accounting

-View Journal entry

Following entry will be made:

Debit Liability

Credit Cash 



Net Entry
Receivables:-
Debit Cash
Credit Payables Clearing

Payables:-
Invoice
Debit Payables Clearing
Credit Liability (Refund a/c)

Payment
Debit Liability (Refund a/c)
Credit Cash

Net Effect will be zero at GL level.