We need to account the money that is paid back (refund) to customer in apps.

In 11i we are forced

to create customer as a supplier, pass credit memo, prepare invoice manually in AP and issue
payment in AP. There is a new functionality to pay back money to customer in R12.

Example for Refund: Amount paid back because of an over collection or the return of goods sold
called refund. or The reimbursement of the purchase price of a good or service, for reasons such as
defective goods or dissatisfaction with the service provided to customer.

How to make manual refund to customer?

Create Refund activity

Query your Receipt and Customer

Refund the money to customer, which was parked in unapplied account

Apply to refund activity. If applied against the transaction, unapply first and apply against refund
activity.

Click refund attributes and provide the details

Save the record

Sooner we save the record successfully we can see Refund Status button

Click refund status. Refund status is not applicable for credit card refund.

We can see the AP invoice created by the system automatically for the trading partner.
Create receipt accounting in Receivables.
View Journal Entry

Debit – Cash

Credit – Payables Clearing (Reader can use any clearing account to set off against payables debit)

Go to Payables > System has created payable invoice in AP automatically for Trading Partner
Approve the invoice

Create invoice accounting in Oracle Payables.

View journal entry
Debit – Payables clearing (What has been credited in AR)

Credit – Liability

Make payment

Create Payment Accounting

View Accounting

Net Entry

Receivables

Debit Cash – 1110

Credit Payables Clearing – 2220

Payables

Invoice

Debit Payables Clearing – 2220

Credit Liability – 2210

Payment

Debit Liability – 2210

Credit Cash – 1110

Net Effect will be zero at GL level.