Insurance Reimbursements
SmDavis
Member Posts: 1
Hello all! I need help with how to account for an insurance reimbursement. I made a sale and the item was damaged in shipping. I refunded the customer and filed a USPS insurance claim. How do I account for the loss and reimbursement? I haven't written off the invoice yet. Thank you
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Comments
@SmDavis,
In essence, you recognize the cost of sale but no revenue. Any insurance reimbursement would be revenue. In effect, offsetting the cost of the item in cost of goods sold. The accounting for it is going to depend the mechanics of how you recognize income. I wouldn't think you need to delete the invoice but your refund should be coded as a refund of income on the income statement. That would negate the sale. Cost of the item and bank fees would not need to change on the income statement.