I usually post straightforward refunds of the purchase price as debits to N/C 4000, i.e. making it as if the sale had never happened. But in some cases we have, in addition to the refund of purchase price, paid back the postage costs that customers incurred to return faulty items to us. (We then send them on to the supplier, in the hopes of getting a refund ourselves if the products have manufacturing faults.)
Is this simply a postage expense i.e. 7501? Or is it carriage inwards, i.e. 5100? Or something else entirely?
I would be tempted to use either 7501 ( or a new code in that range for Returns), as carriage out is an admin expense, and this is a a reverse of that, and is either a goodwill gesture, or a legal requirement, if it is a distance selling company.
It is not goods inward as such, which is a cost of sale.
I personally would have a seperate account for sales returns as well in the 4xxx range
Thanks for your replies. I think I will set up a separate code for return postage in the 75xx range. It is a little annoying to have to do so, because the sums involved are small, but it would be something worth tracking. However I think I will still just record "ordinary" returns of the purchase price as debits to Sales. They already show up fairly well because they are debits rather than credits. Also, the vast majority of such sales are paid for by Paypal and the Paypal statements deal with returns in this way.
