I am getting myself confused I need to set up sales returns and purchase returns in sage, I was going to put sales returns to 4xxx code and purchase returns to 5xxxx however I am now arguing with myself that by doing this I am increasing my sales and purchases and not decreasing it, if it was in my T accounts I know how to do this but I cant seem to decide on a correct sage code and I have to show these accounts to be actually set up on the COA - can someone please advise?
Sales returns should be in the 4xxx range, like sales, but the returns should be debits not credits. Thus the sales returns subtract from the sales.
Purchase returns should be in the 5xxx range, like purchases, but the returns should be credits not debits. Again this means that the returns subtract from the purchases.
Actually, although you can always journal as above, Sage does not deal with returns particularly well. There does not seem to be a quicker way of doing a return correctly than doing a journal every time. If you try to speed things up by treating a sales return as a bank payment, the VAT wizard wrongly interprets what should be a reduction in sales VAT as an increase in purchase VAT. (And the equivalent error for a purchase return.)
Maybe that isn't so bad. The total VAT to pay is still correct. But it bothers me.
Actually, I have the sales returns not just in the same range as the sales but on the exact same code, 4000, and the purchase returns on 5000. That means the sales total is reduced by the amount of sales returns automatically, and it's still easy to separate out the returns from the sales because they are debits instead of credits. (Likewise for purchase returns on 5000.) However I know there are many people who prefer a separate nominal code.
Thank you very much for the clarification - this has been extremely helpful - I do doubt that sage is the best package on the market but I haven't done enough research to know of any more
