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Posting Transaction

Help needed to post a refund from the bank for an invoice that has been paid in full

Hello

Can anyone help me with how i would account for a refund through the bank when the invocie has been paid for in full. An order has been placed and card payment taken immediately. However, some of the items were out of stock so the company sent the in stock items and processed a refund for the out of stock items. The total invoice was for £617 and the refund was for £264. Unfortunately, the company were unable to reissue a new invoice for the £353, so on my supplier ledger i now have the original invoice for £617 with the full payment for £617 and these to allocate perfectly. The problem i now have though is the refund coming into the bank for the out of stock items as i have no invoice to allocate this to and the supplier account should also reflect the invoice for the £353. Can anyone help with these postings please. 

Thank You

CJ

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07th Dec 2017 15:50

You are missing the credit note. Then you will balance perfectly.

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to johngroganjga
08th Dec 2017 00:26

Thank you

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07th Dec 2017 16:01

As John says, you are missing the credit note. As for how to apply the refund from the supplier in practical terms will depend on what program you are using. For example, the process for VTT+ is quite different to Sage.

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to andy.partridge
08th Dec 2017 00:28

Thank you

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to ClaireJPierce
07th Dec 2017 16:46

It doesn't bother you that a purchase invoice is a credit to the supplier's account and the subsequent payment is a credit to the bank ?

You do that every day.

Every transaction has a debit and a credit. They go to different accounts.

What your colleague has done is akin to traveling from London to Bristol by going eastwards.

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to lionofludesch
08th Dec 2017 00:30

Thank you

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to ClaireJPierce
07th Dec 2017 17:03

ClaireJPierce wrote:

Yes so the invoice goes onto the supplier account as a credit and the relevant expense account is the debit. Once payment is made the bank is credited and the supplier account debited.

A credit note and refund is exactly the opposite.

Surely you can see that ?

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By johnt27
to ClaireJPierce
07th Dec 2017 16:55

If it were me I would start again.

So get rid of all the c*ap your colleague has done by using the remove and redo and void functions. Raise the credit note on Xero. From the credit note screen you will have the option to process a refund to the relevant bank account. Do this, then go back to the bank account and reconcile the refund against this payment.

You may need to remove and redo the refund transaction from the bank statement if this has already been reconciled to enable you to match the statement line to the refund allocated on the credit note.

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07th Dec 2017 16:04

If the company doesn't send you one, make your own up.

£220 + VAT, if the supply is a standard rated one.

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07th Dec 2017 17:47

As you know in the normal course of events a supplier payment would be matched against a supplier invoice.

In your new situation you also have a match, but an opposite one. You will match a supplier credit note with the refund.

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08th Dec 2017 08:34

My colleague put the invoice for £353 on the supplier account and then he raised a credit note for £617. He then allocated the £353 to the credit note which in turn will credit off the expense account so that we haven’t charged that nominal twice. He has then done the cash refund, which has debited but posted this to the contra account and then done a bp to the contra account, which in my view was incorrect as surely this now leaves an incorrect bp transaction on the bank. I don’t understand why he didn’t just raise a credit note for the £264 and do the cash refund on xero and it’s because of that transaction that I became confused as I was unable to raise a credit note. Like you said the first transaction needs to be removed and then a credit note can be raised and matched to the refund.

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to ClaireJPierce
08th Dec 2017 09:32

Quote:

My colleague put the invoice for £353 on the supplier account and then he raised a credit note for £617. He then allocated the £353 to the credit note which in turn will credit off the expense account so that we haven’t charged that nominal twice. He has then done the cash refund, which has debited but posted this to the contra account and then done a bp to the contra account, which in my view was incorrect as surely this now leaves an incorrect bp transaction on the bank. I don’t understand why he didn’t just raise a credit note for the £264 and do the cash refund on xero and it’s because of that transaction that I became confused as I was unable to raise a credit note. Like you said the first transaction needs to be removed and then a credit note can be raised and matched to the refund.

You need to educate your collegue. I'd've just raised a credit note for £264 myself.

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