This process manages the process of sending a defective item back to the vendor and receiving credit or a replacement. Users can keep track of numerous items in different stages .
- A Warranty Tag Report and corresponding Warranty Pending G/L account is available to track items that have been returned by customers, but not yet claimed to a vendor.
- A Warranty Claim Report and corresponding Warranty Claim G/L account is available to track pending vendor claims awaiting a monetary allowance or replacement item.
- In addition, allowance can be made if the vendor’s replacement or credit is for a different amount than the value of the item. A Warranty Variance G/L account serves this purpose.
Preliminary setup required
- Vendor Master: Enter the Warranty Tag requirements in the File > Vendor > Master> Setup > Warranty for any vendor who provides warranty-eligible products. You may also choose from a system list of failure reasons to streamline data entry.
- Product Master: Define each product’s eligibility for a Warranty in File > Product > Master > General. Differing characteristics can be assigned to “Parts” and “Equipment.”
- Company Master: Go to File > Company > Master > Sales > Process Warranty Claims for Open Sales Orders to establish whether a claim may be initiated before the return sales order has been invoiced. Go to File > Company > Master > Purchasing/Inventory > Use Manual Warranty Claim Numbers to establish whether or not to use system generated claim numbers.
- General Ledger: Create three new G/L accounts as shown in the following table and update Accounting > General Ledger > General Ledger Control Table.
|
Warranty Pending |
Warranty Receivable |
Warranty Variance |
|---|---|---|
|
Current Asset on Balance Sheet: Number G/L account below inventory asset accounts |
Current Asset on Balance Sheet: Number G/L account below accounts receivable accounts |
Cost of Sales on Income Statement. Number G/L account below main Cost of Sales account |
|
Suspense account – amounts pass through temporarily. A balance in the account is indicative of a pending process. |
Suspense account – amounts pass through temporarily. A balance in the account is indicative of a pending process. |
Cost account – maintains a fluctuating balance if there are variances. Clears out at the beginning of a new fiscal year. |
|
Sales Journal Account is debited when a return credit is processed through Sales Order Entry and a Warranty Tag is created. |
Warranty Claim Journal This account is debited when the warranty claim is submitted to the vendor for the expected amount to be received. |
Purchase Journal Amounts are posted here when there is a difference between the expected amount and the actual amount replaced by the vendor. |
|
Warranty Claim Journal The account is credited when the vendor claim is created. |
Purchase Journal The account is credited when the vendor’s credit is received. |
Purchase Journal Account is debited if the vendor returns less than the claim amount and credited if the vendor returns more than the claim amount. |
- Process the return sales order and generate a warranty tag
- Go to Sales > Order to create a product return invoice for the customer.
- Select Warranty from the Enter Return Action window.
- The New Warranty Tag window will appear.
- Complete all required fields as per the vendor specifications. Serial numbers may be required for equipment. Upon saving this information, a systematically numbered Warranty Tag will be created. The information will display as a hyperlink under the S/O item description.
- Invoice the order before submitting a Warranty Claim to the vendor. If you have enabled the company master flag to allow claims to be submitted before invoicing the sales order, the system will permit a claim to be created immediately.
System Sales Journal G/L Transaction:
Debit Warranty Pending for cost of the product ($360). This is the amount claimed from the vendor.
Credit Cost of Goods Sold for the cost of the product ($360)
Debit Sales Returns & Allowances for the selling price ($480)
Credit Accounts Receivable (or POS Deposits) for the selling price ($480) - Create a warranty claim ticket
- Go to Inventory > Warranty > Create Warranty Claim.
- Choose the branch and click Search for a list of eligible claims sorted by vendor.
- Check the box to the left of the item and click Create Claim.
- After saving, click Print to produce a Warranty Claim form or Print Tags to create item tags.
System Warranty Claim Journal G/L Transaction:
Debit Warranty Receivable for the item cost ($360). This amount will remain in the account until the vendor issues credit.
Credit Warranty Pending for the item cost ($360). This clears out the amount posted in the account from the Sales Journal when the invoice was created. - Receive warranty credit from the vendor
- Go to Inventory > Warranty > Receive Warranty Claim.
- Enter the tag number or use the search icon to locate the claim.
- Click the Edit button.
- Under Received Type, select the vendor compensation option. If Credit is selected, press the Tab key to enter the vendor’s invoice number, or assign a system number.
- Under Received, enter the vendor’s credit memo amount. If the value is different than the original claim, a variance will appear. In this example, the vendor has credited an additional $5 over the merchandise cost.
- Do not use cash receipts posting to receive warranty refund checks from the vendor if a tag was processed according to the above instructions.
System Purchase Journal G/L Transaction:
Credit Warranty Receivable for the cost of the item ($360). This clears out the amount posted from the Warranty Claim Journal when the claim was entered.
Debit Accounts Payable for the amount of the vendor credit memo ($365)
Credit Warranty Discrepancy Expense for the vendor over refunded amount ($5)
See also
Work with warranties