How to handle refunds.
accounting4me
Member Posts: 26
Hey guys!
I have given a customer a small refund as I way overcharged them on postage.
The problem im having is that i dont know how to categories it in my transactions.
In my transactions where the refunds appears through my paypal account, i have clicked choose a category from the drop down box. The only thing that looks like it might be ok to use is "refund for income" even though its more of a refund for postage cost. I tried to look in my chart of accounts for an appropriate category but found none. I also noticed that the "refund for income" that was an option in the drop down menu in my transactions was not in my chart of accounts at all. can someone please explain why?
Can someone please explain the proper way to go about categorizing the refund in my transactions. Im still new to this and want to do it correctly.
Comments
Im gonna have a guess here. I think what i should do is click on refund for income, and then select refund for sales under income accounts.
At the end of the day the whole sale, including the postage cost that i received is considered an income, and the postage is expenced separately anyway.
Is this correct. Im not going to change anything until someone can confirm with me.
Hey @accounting4me! Your workflow sounds pretty solid and what I would have recommended that you do. One thing to note is that if you actually invoiced your customer in Wave, there is also an option for you to categorize the refund to the invoice itself through the transactions page.
Thanks heaps for that. Nope i didnt invoice through wave. thanks for your response!