In case you\u2019ve made the sale, but at a later date it turns out the customer isn\u2019t all that interested in the goods and wants a full refund, you are first off stuck with the goods, but what\u2019s more, you should also credit your sales to full. Provided of course your customer is eligible for a full refund, your sales should in fact be less by the amount refunded. Note here that it\u2019s not expense in essence, but just decreasing the net sales amount on your income statement. It is not acceptable to still show full amount in sales and then recognize the expense on some other account. Anyhow, the accounting entry for a full credit is as follows:
\n
\n Db: Sales
\n Cr: Cash and cash equivalents <\/p>\n
It\u2019s somewhat trickier with goods themselves. If you get them back and they are not usable, they stay as expense part of cost of goods sold. However, in the case they are usable once more either for spare parts, for reselling, etc., they should also be taken out from expenses and put back into inventory. The accounting entry would look something like this (it may be that the entry is just for some of the goods, but with the amounts variating, the idea is the same):<\/p>\n
Db: Inventory
\n Cr: Cost of goods sold<\/p>\n
So effectively, if you\u2019re in the situation where you have to credit your sales, do make it a point to decrease the net sales and not create an expense account separately for such expenses. Yes, they may seem expenses, but in the end if you think about it, you should just take some of the sales off your income statement and not create additional expenses. <\/p>\n","protected":false},"excerpt":{"rendered":"
In case you\u2019ve made the sale, but at a later date it turns out the customer isn\u2019t all that interested in the goods and wants a full refund, you are first off stuck with the goods, but what\u2019s more, you should also credit your sales to full. Provided of course your customer is eligible for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,35],"tags":[],"class_list":["post-2812","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-7-basic-entries"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2812","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=2812"}],"version-history":[{"count":2,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2812\/revisions"}],"predecessor-version":[{"id":2863,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2812\/revisions\/2863"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=2812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=2812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=2812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}