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How do I record a Deposit and Refund ?

Cuddles

I rented a machine from a rental place. My $50 deposit transaction shows on my Credit Card account on day 1, and when I returned the machine, my CC transaction shows a refund of $6.13 on day 2.

My solution was to split the deposit transaction into the actual rental cost + sales tax + amt refunded, leave the next day refund transaction alone, and use the category to cancel the $6.13 between the two transactions.

Is this the correct way to do it ?

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Accepted answers

Chris_QPW

Yes, you did it correctly.

All comments

Chris_QPW

Yes, you did it correctly.

Cuddles

Chris_QPW - Thanks for your advice on this one

NotACPA

Another option, but yours worked as well, would have been to Transfer the original $50 to a "Receivables" asset type account from the card and when you returned the machine create a $6.13 credit in the card account with splits of $50 (positive number) coming from "Receivables" and -$43.87 (note the negative sign) using the categories you chose for the expense.

Tom Young

For me, it's a bit unclear if you did do this correctly as you don't really describe how the split amounts were allocated and if it's a 2-way split or some sort of 3-way split.

Assuming that you're not trying to keep track of sales taxes as a separate Category and simply want the net final charge ($50.00 - $6.13 = $43.87) to show up as some Category - let's say "Equipment Rental" - then I see no need for any split. I'd simply expense the initial charge of $50.00 to Equipment Rental and then show the refund as a "negative expense" to that same Equipment Rental Category for the net expense of $43.87.

If you did want to keep track of sales taxes as a separate Category then the most obvious way of doing that would be a 2-way split of the $50.00 between the Equipment Rental and Sales Taxes, (you'd have to do a little math to derive the two numbers based on your local sales tax rate), and then do another 2-way split of the $6.13 between the two Categories.

Seems like one way of doing a 3-way split of the $50.00 would involve a balance sheet Account, (some kind of "receivable"), for the $6.13, a "receivable" that would be subsequently satisfied (eliminated) by the $6.13 refund the next day. I guess you didn't do that.

So I hope you got the right "net" answer for whatever you were shoot for, but I'm not certain you did.

NotACPA

@Tom Young I track sales taxes … and in the OP, it was indicated that such is also wanted.