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Video instructions and help with filling out and completing What Form 843 Overpayment

Instructions and Help about What Form 843 Overpayment

What a customer overpays you, how do you go about reconciling this? There are a few methods for this. The first one is to find a match on the transaction and allocate it to any outstanding invoices. Then, with the remaining amount, post this as an adjustment. This adjustment will go into your balance sheet account and will be represented under rounding. However, it will need to be dealt with towards the end of the year. For now, it reconciles the transaction. - Another method, similar to the previous one, involves making an adjustment at the year-end. In this method, we clear our balance sheet account by writing off the overpayment straight to the profit and loss. However, before doing this, we need to ensure we have an account code within our chart of accounts. This code should be an overhead expense code with no VAT and can be named "minor write-offs" or "minor adjustments". Once we find a match to the relevant invoices with the overpayment value, we create a new transaction for the difference and post it to the profit and loss account. By doing this, we don't need to make any adjustments at the year-end. - If the overpayment value is significantly larger and the customer has paid an invoice twice, or has no outstanding balance, we can allocate it to their account and later take necessary action. This could be a refund, an allocation against a future invoice, or even a write-off from the bank transaction. To do this, we find a match on the bank transaction and create a new transaction. Instead of a direct posting, we allocate it as an overpayment. We make sure to re-enter the contact name, which will be picked up from the bank reference. It's important not to duplicate any contact records....