[mrd1995]

Hello

Question- if we bill a customer in one month and then void and rebill that same sales order after the month has been closed out (month in which the bill was initially generated), how does this affect our accounting system?
For example, say we bill ABC Co. in June, then close June out. In July we learn that something on that sales order is incorrect so we void the invoice and rebill in month of July. That invoice would have been put to June sales figure when closing out the month of June, but then we void and rebill in July.

Please help explain. Thanks.

[Fidget1]

when you void the invoice your accounting system should reverse the original entries. The new invoice raised will record the correct amounts.

Obviously, this will all take place in July's accounts, but it's not that different from a customer returning goods in a period after they've been invoiced.

Your sales figure for June has already been reported, so there's not much you can do about that. Depending on what the difference is between the value of the original invoice and the new invoice, you could put a note in July's accounts to explain, but if it's not much of a difference then there's no need to draw attention to it.

[jerileycpa]

The affect to your accounting system is that you are recording part of the sale in June and part of it in July. For example, if you bill the customer $100 in June, then June sales are $100. But if in July, you realize the bill should have been for $150, voiding the first invoice debits sales $100 and generating a new invoice credits sales for $150. The net impact is $50 sales billed in July.

That's a departure from accrual accounting, but like Fidget says, if that doesn't happen too often or the dollar value isn't material, it shouldn't be a problem.