How to process money refunded from supplier

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I paid for a laptop repair that was quoted at £100 and allocate the money to bank spend and expense account client repair expense account. However they were not able to repair the laptop due to the fact that it was a motherboard issue and thus not worth repairing, so they have only charged for the inspection fee. So they returned £50 to my bank account.

I know that the usual process would be for me to create a debit note against my supplier and I would pay less money next time as they would normally supply a credit note on their side. However I don’t intend to use them again and they refunded the money rather than supplying a credit.

So what I have done is I have done bank receive and selected expense account Client Repair Expense. Because this is the start of my financial year (I happened to pay the monies in March towards the end of my financial year), my expense account is now showing in the negative. I realise that when I pay for more repairs, this will go back into the positive, so I am not worried about that. However, I would just like to know if I have done this correctly.

@lubos I tried to find the information in your new guides, but this particular issue is not there yet. However, one thing I picked up is that I am not sure how to search the guides to find what I am looking for?

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What you have done is definitely acceptable, @dalacor. It is appropriate to think of this as a contra expense because the two transactions are so closely related.

An equivalent would be to allocate to miscellaneous income, but that would be somewhat misrepresentative, because the refund isn’t truly revenue. You did not earn it. It was a return of an expense. Personally, I prefer your original approach. And I agree there is no point in plunking this into supplier credits. Think of this as the second portion of two-part payment. Suppose you had paid a deposit to cover inspection and some of the repair, with the expectation of paying off any remainder after they knew exactly what parts were required, etc. The second transaction would clearly be an expense even though it is an adjustment to the main payment. In your case, that remainder just turned out to be negative.

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Yes I agree, I did not want to record it as revenue as its not income. Ok, I have left it as is. Thanks.