Where do I put refunds

1

I am doing a set of accounts for my club and they have given some refunds.

The first lot are for a meeting that was cancelled in the financial year before and they have refunded in this financial year I am not sure what to do with it I want to set up an account in the chart of accounts but not sure where.

The second lot of refunds was made in this financial year which is correct as people have left town straight after they paid at the moment I have set it up in the chart of accounts under income and debited so you can see its come off the membership paid(Sales) amount but I am not sure if this is right.

I am not using the credit notes function I have imported the bank statements and have recoded them to the right accounts except the refunds

2

If refund is given by supplier, it should offset the original expense so simply allocate the refund from supplier to relevant expense account.

If refund is given to customer, it should offset the original income so simply allocate the refund to customer to relevant income account.

There is also another way to record refund and that is by credit notes. But you would only do this if you would be maintaining accounts receivable which doesn’t appear you are doing.

3

When entering importing a statement that contains transactions that are refunds, can you clarify how exactly this would work?

Would you need to enter a negative amount in the expense account?

4

If refund is to offset expense, simply select relevant expense account when categorizing bank receipt. Don’t modify the amount.

5

I got it worked out, I debit bank so that is correct and opened a new account in libilities called refunds for previous year and credit that. So it does not come off income and shows in the balance sheet.

6

But that’s wrong. Refunds are not liabilities.

If you don’t want to offset expense account, you can create income account called Refunds received and allocate any refund to this income account.

7

Yes I knew that so I changed that what I did was set up customers as members and in opening balances I put the amount they paid and then did a credit invoice. so that came off their opening balance and came out of our bank so the bank is correct . and now it does not show in the accounts as such but I will write a note to go with the notes to the accounts so the club knows what has gone on.