Proration rule to apply the credit memo

The document explains the proration rules applied to credit memos, detailing how unapplied amounts are distributed across invoice items.

Prorate the credit memo

The total unapplied amount of the credit memo is $90 (= $30 + $40 + $20). The amount of credit memo you want to apply to this invoice is $60.


Credit Memo Items	Unapplied Amount	Amount To Apply	Proration Rule
Memo Item 2	$30	$20	$60 * ($30 / $90)
Memo Item 3	$40	$26.67	$60 * ($40 / $90)
Memo Item 1	$20	$13.33	Last item: $60 - ($20 + $26.67)
Memo Item 4	- $10	0	Negative unapplied amount is not included in the proration rule

The balance of the Invoice Item 4 is negative, so it is not paid.

Apply the Memo Item 2 to each invoice items. Total balance of the invoice is $160 = ($40 + $40 + $80).


Credit Memo Items	Amount to be applied	Invoice Items	Item Balance	Settled Amount	Proration Rule	Remaining Balance
Memo Item 2	$20	Invoice Item 3	$40	$5	$20 * ($40 / $160)	$35
		Invoice Item 1	$40	$5	$20 * ($40 / $160)	$35
		Invoice Item 2	$80	$10	Last item: $20 - ($5 + $5)	$70

Apply the Memo Item 3 to each invoice items. Now, the total balance of the invoice is $140 = ($35 + $35 + $70).


Credit Memo Items	Amount to be applied	Invoice Items	Item Balance	Settled Amount	Proration Rule	Remaining Balance
Memo Item 3	$26.67	Invoice Item 3	$35	$6.67	$26.67 * ($35 / $140)	$28.33
		Invoice Item 1	$35	$6.67	$26.67 * ($35 / $140)	$28.33
		Invoice Item 2	$70	$13.33	Last item: $26.67 - ($6.67 + $6.67)	$56.67

Apply the Memo Item 1 to each invoice items. Now, the total balance of the invoice is $113.33 = ($28.33 + $28.33 + $56.67).


Credit Memo Items	Amount to be applied	Invoice Items	Item Balance	Settled Amount	Proration Rule	Remaining Balance
Memo Item 1	$13.33	Invoice Item 3	$28.33	$3.33	$13.33 * ($28.33 / $113.33)	$25
		Invoice Item 1	$28.33	$3.33	$13.33 * ($28.33 / $113.33)	$25
		Invoice Item 2	$56.67	$6.67	Last item: $13.33 - ($3.33 + $3.33)	$50

The invoice details after applying the credit memo are as follows.