How do I use the "Refund for an Expense" category?

CherappleCherapple Member Posts: 8

I'm trying to figure out how to account for a "refund on an expense." The system automatically categorizes it as "income." How to do I account for the receipt and remove the amount from the expense category that it originally came out of?

I see no "refund on an expense" category in Wave. If I have to create it, does it go under "income"? How do I create it?

Comments

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Hi, @Cherapple.

    There is a category for it in the new version of Wave (we'll have everybody moved over in a few months, stay tuned!), but for now, you can do it with a journal entry. Just debit from the right expense category and credit your bank account.

    You can do this from the Journal Transactions page, under Accounting. Let me know if you need help with it. Journal entries can be a bit of an accounting headache. Wave takes care of most of those behind the scene, but it still isn't a bad idea to get familiar with them.

  • CherappleCherapple Member Posts: 8

    Thank you, Alexia! I added a negative expense transaction to offset the original amount and used the same account or category that the expense came from. Does that work as well?

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Yes, @Cherapple, that also works! As long as the expense account is credited and your bank account is debited, you are golden!

  • CherappleCherapple Member Posts: 8

    Thank you so much for your help, @Alexia!

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    More than happy to help, @Cherapple! Let us know if you need help with anything else!

  • AuroraRetailAuroraRetail Member Posts: 3

    Hi @Alexia
    Saw this thread, and wondered if this refund capability was now implemented, as I can't find it, and maybe I'm looking in all the wrong places.

    I started with Waves a while ago, to get try it out, and it seemed fine, and now am fully invested in making it work. Come across a sticking point last night though that causes the balance sheet transaction report not to balance with my existing spreadsheet with which I am cross-referencing to make sure everything balances and is recorded properly.

    That sticking point is: Receipt refunds

    In the interests of the company, I have bought various items, and during the year, I have had a handful or items that I have returned, or for which we have received partial refunds. As a result, the bank accounts show it as debit and credit, but in my records I have it down as a 'reversal'.
    The last thing I want is for the system to think that a refund is 'income', as it's not, and since I have to consider VAT, this is even more complex.

    I'm not an accountant (and far from even getting close to understanding the basics), but I just want to make sure that it is correctly entered.
    I have tried looking at journal, and it just says unbalanced whatever I put in!

    So I'm really struggling to know what to do, and welcome guidance if possible on how we should use Wave to handle a refund (or part refund), a month or two later than a receipted transaction.

  • JamieDJamieD Administrator Posts: 1,145 admin

    Hey @AuroraRetail. Technically, what you can do in this situation is simply just categorize the income transaction that comes through (since it's a credit into your account) as a 'refund for bill payment in Wave. This is the only way to categorize a refund for a specific bill in Wave at the moment I'm afraid -- it won't show up in your Profits & Loss report as income.

  • brucehvnbrucehvn Member Posts: 5

    @JamieD What about if the refund does not go to a bank account but just gets credited to the vendor's account. For instance, we have a Home Depot commercial account. I record bills for all purchases we make and when we make a payment from our bank account, I record payments on the outstanding bills. If we return something, it shows up on our statement as being credited, but we don't actually get any cash back, we just let that credit reduce our balance. What would be the proper way in Wave to record this? I'm a little confused in general as to if I'm handling this account properly. It is a credit card, but it seems that if I created a liability account for the credit card, I wouldn't be able to use the bills portion of Wave, since it just credits accounts payable and not the credit card account. So we handle Home Depot as a vendor instead.

  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hey @brucehvn . There's different ways you can handle this, although personally I would just add a negative amount to one of your Bills to show a credit. You can call the item "Credit" and add a minus in front of the amount, and this will bring down the total amount that's due for the Bill.

    Credit Cards work perfectly with Bills as any Payments account can be selected to make payment. Try it out and see how it works!

  • Eddie_QEddie_Q Member Posts: 2

    @AlexL said:
    Hey @brucehvn . There's different ways you can handle this, although personally I would just add a negative amount to one of your Bills to show a credit. You can call the item "Credit" and add a minus in front of the amount, and this will bring down the total amount that's due for the Bill.

    Credit Cards work perfectly with Bills as any Payments account can be selected to make payment. Try it out and see how it works!

    Hi, I'm having the same issue as to how to account for refunds: Placing a negative in front of the amount brings a system transaction error. Are there any other alternatives?

    Appreciate it.

    Eddie

  • JordanDJordanD Member Posts: 515 ✭✭✭

    @Eddie_Q Refunds for expenses in Wave should be a category within your Chart of Accounts. This means that provided that you have the income transaction for the refund in your Wave account you can categorize it as a "Refund for expense". If this is a refund of a bill in Wave, then you can select "Refund for a bill in Wave" and select the appropriate bill!

  • LHolandaLHolanda Member Posts: 2

    Sorry to revive this thread. I have a similar issue, but instead of refund because I returned items, I have duplicate transaction because Amazon charged me twice by mistake and they reversed right away. So, in my bank statement, I have three transactions: (a) the real one that I'm categorizing as "Office Equipment", another one (b) of the same amount (mistake by Amazon), and the last one (c) for the correction from amazon of the opposite amount. In this case does the correction transaction (c) still go into "Refund for expense"? How about the invalid one (b)? Since I don't have a receipt for that, I'm afraid it should not go into "Office Equipment". Is there a way to link (b) and (c)?

  • Alcantara_Hardwood1Alcantara_Hardwood1 Member Posts: 2

    I don't see this information provided in the thread and am new to Wave. I am look to find out how Wave tracks the refund of expenses. I do not see it in the profit and loss. Is it accounted for in my total income? Is the refund value deducted/accounted for in the expenses totals section?

  • MikegMikeg Member Posts: 995 ✭✭✭

    @Alcantara_Hardwood1,
    From Accounting/Transactions: Any income (in green) that is not sales would be categorized as a Refund of Expense. Select that category from the drop down menu and then select your expense.

  • Alcantara_Hardwood1Alcantara_Hardwood1 Member Posts: 2

    @Mikeg
    Thank you for the information you provided. I think I may have no explained myself properly. When I go into my profit and loss breakdown I do not see the refunds in the income section, is that accounted for anywhere in the profit and loss?

  • familyguy2021familyguy2021 Member Posts: 0

    @Alcantara_Hardwood1 said:
    @Mikeg
    Thank you for the information you provided. I think I may have no explained myself properly. When I go into my profit and loss breakdown I do not see the refunds in the income section, is that accounted for anywhere in the profit and loss?

    Hey @Mikeg and everyone else trying to figure out how to keep track of a purchase that you had to get a refund on, I ran across this post myself as I was having the same issues as everyone else. While reading this thread I noticed that nobody had given a direct solution to the original question. So hopefully, I can help... I just found the solution myself and thought that I would share it.

    To add a 'Refund for Purchase' or a 'Refund for Expense Transaction, follow these simple steps...
    Step 1: Go to Accounting>Transactions
    Step 2: Click on 'Add income'
    Step 3: Once there under 'Category' you will see 'Uncategorized Income' in red lettering, click the drop down menu and select 'Refund for Expense'
    Step 4: Now, select the Expense Account/Category that the refund should be debited from (the original Account/Category used when making the initial purchase)
    Step 5: Now add the amount and enter notes as necessary. Click 'Save'

    That's it! Now your Chart of Accounts will reflect the refunded purchase correctly and it will not affect your profit/loss statement.

  • DonnaS_VIM2021DonnaS_VIM2021 Member Posts: 2

    I have a payment transaction that was pulled in from the bank. This payment by check consists of an expense and a credit for a different type of expense. When I try to split the transaction, I am not seeing the option for Refund for Expense and am unable to change it to an income item or to enter it as a negative expense.

  • MyDesiredOutcome_1MyDesiredOutcome_1 Member Posts: 1

    Hi,

    Thank you Donna for your detailed process.

    Does anyone know how to record a refund that was given on Jan. 6, 2022 from a vendor regarding a purchase that was made on Dec. 30, 2021? How does that account in terms of accounting?

    Thanks!
    Michelle

  • wave_anon232wave_anon232 Member Posts: 2

    I think I see the issue people might be having.

    You cannot do a group edit of a refund. You have to do each one individually. It took me 30 minutes to find out that I could do it one by one by simply clicking uncategorized.

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