Home – New Forums Money matters I have a question regarding the reconciliation of refunds – Need help

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  • #996942
    uselesstaxguy
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    Hey team.

    I run a service which customers book and pay for online in advance of their appointment. Occasionally, customers can’t make it for whatever reason, so I process a refund for them.

    The original sale for the appointment gets reconciled to a ‘Sales’ account in Xero. In the past, I’ve also been reconciling the refunded sale to the same ‘Sales’ account (but this time as a negative figure). This ends up reducing my ‘total income’ figure in Xero. However, I’ve recently been thinking that maybe the correct account for the refunded sale would actually be something like ‘cost of goods sold’ because it seems incorrect to be reconciling a negative figure to the ‘Sales’ account.

    On top of this, I also get charged a small merchant fee from Stripe for each sale, which gets reconciled separately to an expense account called ‘Stripe Fees’. Whenever a sale is refunded, Stripe refunds the original fee back to me, which I’ve been reconciling to the same ‘Stripe Fees’ expense account (however this time as a positive figure). Should I also have a separate “expense” account for these merchant fee refunds?

    Hope someone might be able to help me out here. Feel free to ask any questions for clarity etc.

    Cheers,
    John

    #1209620
    Paul – FS Concierge
    Keymaster
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    Hi and welcome to the Flying Solo community John.

    It is great to have you.

    I am sure an Accountant will swing by and answer your questions.

    Cheers

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