Correct way to handle credits and refunds

[Tommy Trussell]

On Wed, Dec 10, 2008 at 11:14 PM, timzak <tzakharov at charter.net> wrote:
>
>
> Mike or Penny Novack wrote:
>>
>> timzak wrote:
>>
>>>On the occasional time I've had to return a purchase, the amount credited
>>>seems to appear in my Income section.  Is this correct?
>>>
>> No --- a credit for return is a negative expense item (completely of
>> partially canceling out an expense). To record it as an income item
>> overstates both income and expense.
>
> I guess what I'm asking is, if I credit an expense item, is it correct for
> it to show in the Income/Expense Report as income?
>
> Here's a real example, now that I'm in front of GnuCash:
>
> my wife was attending a chiropracter for some time.  Her co-pay was $10.  On
> one occasion, the chiropracter accidentally charged her $40 instead of $10.
> So they credited the card $30.  So for that month, we paid $110 for doctor's
> co-pays, with a single $30 credit.  The net amount was $80 paid to medical
> co-pay, but GnuCash, in it's Income/Expense Report, shows medical co-pay as
> a $110 expense under Money Out, and a $30 credit under Money In.  GnuCash's
> report shows, under Money In, a series of Income:source line items, along
> with a single line item Expense:Medical:Co-pay.  It is odd seeing the report
> showing an "expense" under an Income category.  This is the root of my
> original question.
>
> So I guess my question is, is it correct for the report to be showing that
> credit as an "expense" under Income?

when you entered the credit to the card, you should have entered it as
a negative expense.

Go back and edit the transaction and enter the amount going to the
card in the same column as a payment to the card company would appear,
but the corresponding account it's going TO will be
Medical:Expense:Co-pay

When you run a report on the Medical expenses, that item will appear
as a negative number, NOT as "income"