You are probably already aware of this, so I’m sorry if I am repeating. I searched for other topics and I found one where Lubos suggested 2 alternatives to recording a refund:
as a negative ‘payment’ transaction or
as a debit note.
I have also read the ‘use debit notes for supplier returns and refunds’ guide.
I recorded 2 refunds as negative ‘payments’, but when I ran the Tax Summary report for the quarter, I noticed that total sales in the report was different to what it should be. When I drilled down I saw that the income figure had included the negative ‘payment’ transactions.
Is there a way that you can fix this issue? Or is it that the negative ‘payment’ option should not be used?
In context:
I had a payment to a supplier that was offering Buy 3 and get the 4th free.
I entered each line exactly how it was on the invoice (ie with a negative spend money line included in the transaction).
Line 1: $325 x 2 = $650
Line 2: $428 x 2 = $856
Line 3: Buy 3 get the 4th free $325 x 1 = -$325
I realise that to workaround this issue, I could just alter line 1 to be 1 x $325. But wanted to report this issue, because if people are relying on the tax summary report to lodge their BAS, there is the potential for errors in the data.
Example 2.
Paid for Insurance with Company A for one year $1,000
Swapped to Company B before the full year was up.
Received refund from Company A for $300.
First I entered this as a ‘receipt’ - which came up as sales invoice income in the Tax Summary report. Then changed it to a negative ‘payment’ which also shows as sales invoice income.
So is the solution to use a debit note for both of these situations?
And do I understand correctly, that if I create a debit note, I also need to record the money-in as a receipt - allocating the refund to Accounts Payable and the Supplier’s sub-account.
@Kay1, your post is little confusing, but maybe only because of the terminology you used.
First, any payment (or line item on a payment form) for a negative amount will have exactly the same financial impact in Manager as a receipt.
Second, a debit note does not record movement of money into the business. It records a supplier’s credit note, reducing the amount you owe that supplier under Accounts payable.
Third, the way to record the 4th free item in your first example was with a discount of $325 on Line 1. Read this Guide: https://www.manager.io/guides/10530. Use the exact amount option. You did not have another transaction with that supplier. You just paid less for the items on Line 1.
Fourth, the way to record your second example is with a receipt, posted to the same expense account where you originally posted the $1000 payment. No debit note is involved because you no longer owe Company A any money. If you were continuing as a customer and they sent you a credit note instead of a refund, you would have used a debit note.
Yes, but in your two examples debit notes are not necessary.
Whilst the above response focuses on the money side of the transactions it doesn’t resolve your core question which I will re-write as: why do negative “purchases” (insurance refund) show up as “sales” on the Tax Summary report.
That is because the BAS usage of the term “sales” equals - transactions where GST has been received. Not just sales which equates to P&L income, e.g. you could sell a fixed asset and receive GST, this would be classified as BAS “sales” but would not be P&L Income.
Therefore, as you received GST as part of the insurance refund this becomes BAS “sales”
However, if you want that refund to show up under BAS “purchases” then you must use a Debit Note.
There is no error in data, either presentation is perfectly acceptable. It is only an “error” when users assume that BAS “sales” and “purchase” must equal P&L income and expenses - but they are both unrelated.
You can have Interest Received or Interest Paid, neither go on to the BAS but both are part of the P&L.
