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Logic of Refund GL posting

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Jwyatt Posted: Fri, Sep 10 2010 12:40 PM

A client's matter is paid in full.  At some point thereafter we decide to refund $1,000 in fees.  I issue a credit to the matter and then create a refund check.

I notice the G.L. entry for the refund check is a debit to Suspense for Program and a credit to Operating Account.  None of these hit the Profit and Loss statement.

Am I supposed to manually do a JE to debit Fees Earned and credit Suspense for Program?  Is there something that is going to happen automatically at some future time (such as bank reconciliation) that will handle this automatically?  Have I not set up some account correctly?  Is my procedure for refunding money in a situation like this incorrect?

Lastly, it would be nice if I could assign the lost revenue to a particular Staff so that the report "Receipt Allocation by Staff" would reflect that $1,000 was not returned by the staff member who is still receiving credit for the $1,000.

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Jeff Wyatt
Abilene Texas

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The refund option was designed to handle the return of an overpayment, meaning a payment not applied to a bill,  to a client.  You certainly should do a journal entry to offset those created by the refund transaction.   I'm wondering why you wouldn't have just done a QuickCheck to the client and debited fee income.   I'm assuming you wanted that credit AR trail on the matter, but, a note of some kind might have served you better. On the Receipt Allocation Report; because you posted a receipt to the bill that the staff had time entries on, the payments got allocated to those staff.  I agree, that it would be great to be able to control the allocations, and I'm thinking that capability will be available down the road.  As it is, to change the fee allocation you would have to reverse the payment(s) and  re-enter it, (them), but don't apply that last 1,000.00 to the bill. Then refund the 'overpayment' and write off the balance due.  A lot of steps.  Better to just write the check and debit fee income.  Keep a spreadsheet of these sorts of odd happenings and make notations at the bottom of the Receipt Allocation Report each month. 

Kathy Burger PREMIER LEVEL CIC - PCLaw, Time and Billing Matters Plus Certified Kathy Burger Consulting, LLC 200 Windward Ave. Beachwood, NJ 08722 732-279-6301 Kathy@KathyBurgerConsulting.com

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