How Parts-Credit Accounting is Managed By (and in
Connection With) ServiceDesk

Though something of an accounting nuisance, parts credits are not a nightmare.
We simply must understand what we’re dealing with.

First (and by way of contrast from a parts-credit situation), let’s look at a normal pay
scenario where your sale includes $150 in labor and $100 (at cost) for a
part. You’re going to be paid for both via direct check in the amount of $250
from the manufacturer. You’re going to pay your vendor via your own direct
check in the amount of $100. Thus:

‍

Now, let’s contrast with a more typical warranty scenario, where your cost on the
part is netted to zero, via a parts credit as issued by your parts vendor. In
particular, let’s paint it the way it’s typically accounted for by servicers:

The above is straightforward except for one problem. In ServiceDesk, we want
to use the Accounts Receivable functions as a mechanism to assure we receive
all types of “payments” associated with performing a job, including parts credits.
But, to create the A/R records via which this can happen, we must include, in our
SalesJournal entries, even the parts on which parts credits are expected (i.e., as
per the illustration on Page 1, and NOT per the illustration immediately above).

Sadly, the world is not perfect. While the above expedient makes everything
purr lovingly in ServiceDesk, it creates a problem for your end-game accounting.
For our pretend fact situation, ServiceDesk will report $250 in sales (as per
Illustration 1), but you’ll register $0 in parts expense (i.e., after writing checks to
your vendor), as per Illustration 2. Absent some correction, this would result in
showing a profit that’s falsely too high, at $250.

The needed correction is provided by the fact that, in its QuickBooks export,
ServiceDesk includes an entry for Parts Credits Received. It’s up to you, within
QuickBooks, to then apply the amount in that entry as per preference.

Specifically, we recommend one of two approaches:

1. ‍Make a journal entry that reduces your sales by the Parts Credits
   Received amount. This entry will be a credit
   to the Parts Credits
   Received account, and a debit to the Sales Income account.
   Effectively, it will make you end up with the same result as shown in
   Illustration 2.
   
2. ‍Make a journal entry that increases your parts cost by the Parts Credits
   Received amount. This entry will be a credit to the Parts Credits
   Received account, and a debit to your Parts Expense2
   account.
   Effectively, it will make you end up with the same result as shown in
   Illustration 1.
   

FYI, we could have programmed the QuickBooks export to automatically do
either 1 or 2 for you. Instead, we thought it best to let you handle as per your
own preference. Plus, by exporting the Parts Credits Received amount to
QuickBooks as exactly that, we let you see—from within QuickBooks—exactly
what’s involved.