Recording a Credit Card Refund

The nominals and ledgers used in this topic may be different to those in your chart of accounts.

If an item has been purchased on a credit card and subsequently refunded, this guide outlines how to record the refund.

When a credit card expense is processed, this posts a credit entry to the relevant card account on the credit card ledger.

It a refund is issued to the card, this needs to be debited to the same account in order to reduce the amount due for payment as per the credit card statement.

Full Refund

If the amount being refunded is the full amount of the original expense, then the original document can simply be reversed.

  1. To do this, display the credit card expense in a Document Enquiry window.

  2. Right-click on the top line and select Copy Document'.

  3. In the following Destination Document options menu, tick the box Reverse Values and choose a suitable document type for the reversal, the recommended option would be a journal.

  4. The details of the original posting will be displayed on screen with the debits/credits reversed.

  5. Before pressing F5 to post, check that the account column on the VAT line of the document shows the current open VAT period, as the original period shown may have been closed since. (This is the line showing the VAT input nominal of 9521)

  6. The reversal will now be posted to the credit card account.

Partial Refund

If only part of the original purchase is being refunded, then the reversal method above would not be suitable. Instead, a journal can be posted for the portion being refunded.

  1. Go to Options > Document Input and select a Journal as the document type.

  2. Choose the Input form as PSF Journal and enter the date/period of the refund as necessary:

  3. Debit the credit card control nominal (9410) and the card account with the total amount being refunded.

  4. Credit the relevant expense nominal with the net amount (credits can be entered using a minus symbol).

  5. If there is a VAT element to the refund, add a line to post to the VAT Input nominal (9521) enter the amount of VAT in the 'Value' column, and the net amount in the 'User Value' column.

  6. Similarly, on the expense line, put the net amount in the 'Value' column and the VAT amount in the 'User Value' column.

  7. In the example below the refund is for £20, made up of £16.66 net, £3.34 VAT. Enter the supplier VAT number in the UserField3 field.

  8. If there is no VAT included in the refund, then a two-line journal between the credit card control and the expense nominal will suffice.

  9. Press F5 to post, and as before this will reduce the amount outstanding on the credit card account.