Dealing with sales refunds in clients accounts

edkav

Client was taken to court due to a customer trying to get her money back for a bad job done! His client won and he had to refund the money at the end of March. How do I deal with this for the final accounts. Is it dealt with as a credit refund (reducing sales figure) or is it dealt with as an expense?

I always find this area confusing and bad debts etc were never a strong point at college! So excuse me if it is obvious, as i am not seeing it!!:laugh:

Poodle

Hi

I would say that you will have to raise a credit note to reduce the sales.

It is not a bad debt as the customer's liability to pay ceased once the court had made their decision.

Poodle

edkav

Thanks Poodle (again!) - He has just informed me that this has been going on for 6years and that the work was carried out then! Would this still be allowable? He claimed it as income then.