Up until now I have been processing refunds from suppliers through the banking feed, simply depositing the refund amount into the account which the original payment was made from. I got this process fro this video: https://www.youtube.com/watch?v=uQWi7-PVEl8
The problem with this is that the refund doesn't appear in the supplier transactions. I then followed this process:
Step 1: Enter a supplier credit
This makes sure the credit hits the expense account you use for this supplier.
- Select + New.
- Select Supplier credit or Receive supplier credit.
- In the Supplier dropdown, select your supplier.
- Depending on how you record purchases with this supplier, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
- Select Save and close.
Step 2: Deposit the money you got from the refund
- Select + New.
- Select Bank Deposit.
- In the Account drop-down menu, select the account where you got the refund.
- In the Add funds to this deposit section, fill out the following fields.
- Received from: Select the vendor who gave you the refund.
- Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
- Payment method: Enter the method your vendor used to refund you.
- Amount: Enter the amount of your refund.
- Select Save and close.
Step 3: Use Pay Bills to connect the bank deposit to the supplier credit
Even though you aren’t paying a bill, this is the right thing to do. This last step is to keep your supplier expenses accurate.
- Select + New.
- Select Pay Bills.
- Select the bank deposit you just created. You’ll see the amount of the supplier credit in the Credit Applied field. The Total payment should be $0.00.
- Select Save and close.
What seems odd is that the deposit appears now in the supplier transactions, and this means the total for the total balance for the supplier is incorrect. I'm puzzled why a bank deposit received from the supplier directly to an expense account doesn't appear in the supplier transactions, but one to the accounts receivable account does.
Attached is the supplier transactions with the lines related to the refund highlighted in red.
Could anyone advise if the transactions are correct for a refund and also why the deposit is in the transactions.
