UK Accounting for Refund and Credit Note for Equipment Returned

[Lizzie]

I am using Microsoft Money 2001 for Business purposes. We purchased a machine for the business and paid a deposit. I entered the full amount of the machine purchase invoice and the amount for the deposit paid.

The machine was subsequently found to be unsuitable and was returned to the supplier. We received a refund for the deposit, directly into the bank account.

Please can someone advise on how I account for this from a bookkeeping point of view.

I am not sure which categories need to be credited/debited etc. Do I do it through the nominal ledger?

Any help would be much appreciated. Thanks.

 

[Arj]

I am using Microsoft Money 2001 for Business purposes. We purchased a machine for the business and paid a deposit. I entered the full amount of the machine purchase invoice and the amount for the deposit paid.

The machine was subsequently found to be unsuitable and was returned to the supplier. We received a refund for the deposit, directly into the bank account.

Please can someone advise on how I account for this from a bookkeeping point of view.

I am not sure which categories need to be credited/debited etc. Do I do it through the nominal ledger?

Any help would be much appreciated. Thanks.

Hi Lizzie

It does not look like you received credit note but instead they refunded the money and took the good away.

Journal as follows:

CR Asset
DR Creditor (Value of the invoice - deposit)
DR Bank (deposit)

Journal above is the reversal of what you did when posting invoice. I don't know how you entered in Microsoft money but following did occur in the background.

Dr Asset
Cr Creditor
Cr Bank (Deposit)

Hope this helps

ARJ

 

[Lizzie]

Hi ARJ
Thanks very much for your reply and assistance.
I'm sure this will resolve the issue.

Lizzie