Receipt Refund / Payment Refund

Should there be separate transactions for Receipt Refund and Payment Refund?

I will give an example to demonstrate the reason I have asked this question.

I sell 5 widgets and enter a Receipt transaction to record this.

Using a Custom Report - these are the accounts that are affected:

A week later the customer returns the 5 widgets and I enter a payment transaction:

However this is treated as a purchase of 5 widgets and does not reflect in the inventory sales account.

If I change the payment transaction to a Receipt with negative quantity it processes correctly

It is not possible to understand your post. What you call a receipt is a payment. What you call a payment is a receipt.

EDIT: Comment is withdrawn. See post #4

It is clear to me. Basically this is how it goes:

  • @AJD has cash sales for which he is creating a sales receipt.
  • The receipt lines are used to record inventory items sold – Manager automatically classify the sales of items into correct sales accounts.
  • When a cash customer returns the goods, @AJD creates a payment, which reflects the returned items so the inventory move is captured in the payment, however, manager treats all payments containing inventory items as purchases which distorts P&L.

The way I see it @AJD, for a proper treatment of returns, you should do the following:

  1. Create a cash customer account
  2. Create a credit note to the customer
  3. Create a payment to the customer which will settle the credit in the cash customer account.

In this case, I couldn’t find an option in manager to copy a receipt to a credit note (which is handy in this situation) or an option to copy a credit note to a payment (also handy) as this will make it far easier for users to do things the right way and get the correct auto-treatment by Manager.

However, in the meantime since you @AJD have found a clever workaround, you can create a custom theme to retitle negative receipts as payment or refunds.

I withdraw my comment. When I expanded the screen shots for clarity, they came up in reverse order.

But I would not go down the path of using credit notes.

After looking at this situation further, the correct way to record a cash refund on a cash sale is with a receipt in which the quantity is negative and the unit price is the original sale price. (Taxes can be left out of this discussion, because they are handled correvctly by both methods.) This will reverse the posting of the sale amount to Inventory - sales, reverse the cost of goods sold posted to Inventory - cost, and restore the quantity and cost of goods returned to Inventory on hand. As a result, average cost of the inventory item will also be returned to what it would have been had the sale not occurred.

The instructions in the Guide on how to pay a refund–Pay a refund | Manager —are incorrect because of the inability to select the Inventory - sales account (or a contra sales account) to post a payment to, as the Guide says you should. Instead, selection of the inventory item forces selection of Inventory on hand. The result if recording a refund as a payment is that the cost of returned goods is recorded as the original sales price, which distorts the average cost. Further, the original income posting cannot be offset with a contra entry. (Some accounting procedures actually leave the original sale in place, but offset it in a contra income account for returns. Manager won’t allow that. Likewise, the cost of goods sold cannot be offset by the return.)

I will initiate action to update the Guide.

Using Receipts for customer cash transactions and Payments to purchase / supplier transactions is a good idea as in addition to enabling accurate reversal of stock, it also enables reporting of GST sales consistent with many jurisdictions tax department definition of sales, see Goods return (Cash sale/purchase) causes Gross Sales error - #33 by Patch This also make it consistent with what Manager reports if in invoice is used.