EXAMPLE – FIXED APPLICATION IN SALES RETURN
Fixed applications are also a very good means of reversing cost exactly, such as with sales returns. The following example, which illustrates how a fixed application ensures exact cost reversal, is based on the following scenario:
1. The user posts a purchase invoice.
2. The user posts a sales invoice.
3. The user posts a sales credit memo for the returned item, which applies to the sales entry, to reverse the cost correctly.
4. A freight cost, related to the purchase order that was posted earlier, arrives. The user posts it as an item charge.
The following table shows the result of scenario steps 1 through 3 on the item’s value entries.