Franchise Refund Accounting Treatment

I wonder if anyone can let me know if I will be treating a refund of a franchise after 1 year, correctly in the accounts - as not done one before?

Franchise purchased for £10,000 plus Vat by a Sole Trader covering a three year contract.

After year 1, depreciation £3333.33 applied leaving £6666.66 in the balance sheet, and reducing profit by £3333.33 in year 1.

In year 2, disgruntled franchisee, demanded a refund as the purchase was not as agreed.

Amount received is £6048.00 plus Vat.

I am proposing the following:

B/S currently shows DR £10,000 Franchise   and CR £3333.33 Franchise Dpn

If I:

Cr £6048 to Franchise and Cr £3333.33 to Franchise by doing a Dr £3333.33 to Franchise Dpn

this would leave a Balancing Allowance of £618.67, thus reducing profit in the year, as this is the amount he has lost.

By way of a Credit to Franchise and a Dr to P & L

Many Thanks

Carolynne