Occasionally our vendors require advance payments in order to cover their raw material requirement before they will ship to us. The purpose of this memo is to outline the procedures to follow in order to keep both inventory and unit costs correct:
Issue an expense PO to the vendor for the amount of the deposit/advance and charge it to the G/L account:
Issue an inventory PO for the desired quantities at the full unit cost of the item(s)
o On this same PO add an additional line that credits off the amount of the advance from above
Instruct the vendor to bill us for the full value of the inventory shipped.
Instruct the vendor to bill us for the full value of the inventory shipped and to show the advance on a separate line item on their invoice as a credit.
Does any one know how to enter a credit line on a purchase order?