Customer refund - howto?

Maf. King maf at
Wed Sep 10 11:48:05 EDT 2008

On Wednesday 10 Sep 2008, David Mills wrote:
> Hi,
> I have a customer that booked accommodation and paid a deposit.
> A few months later (after bank reconcilliations etc) they cancelled their
> booking.
> I wish to make a refund.  But how can I achieve this correctly (since the
> bank account, Sales and Accounts Receivable have all been affected)?
> Thanks,
> David.


I would suggest that you make the refund payment from Bank -> Sales directly, 
and ignore the AR and invoice section (maybe add a note to the original 
invoice, noting that a refund was made).

IANAA, but thinking the process through, A/R is "promised money".  Once that 
money has arrived at the bank, it is no longer "promised", you actually have 
it, and the A/R asset balance has 2 balancing (ie opposite) transactions and 
thus a net zero balance.  A refund doesn't really have to affect the A/R 
account (unlike the "issue a credit note as partial payment" scenario).

Hope that sounds sensible.


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