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Kelbel6's avatar
Kelbel6
Contributing User
6 months ago

Loan repayment reversal

Good Morning,

Am hoping someone can point me in the right direction.

We have a loan through a third party sales supplier. They take x% of each sale to pay the loan back.

As part of a sales offer my partner offered refunds etc etc.

So when she refunds back through the third party supplier, they add the loan repayment back onto what we owe.

Doing the cash payment part is easy. What I need to know is how to to do the loan repayment part as it never goes through our bank account.

I was going to do a general journal entry, crediting the bank loan etc but I've no idea which account I debit. Would it be the sales account?

Thank you in advance.

Cheers

Mick

  • Earl_HD's avatar
    Earl_HD
    MYOB Moderator

    Hi Kelbel6 ,

    Thanks for your post. 

    I would like to check if you're still having this issue? 

    In this type of scenario, we recommend reaching out to an accountant for an accurate solution. However, here's an idea on how to properly account for the loan repayments handled by the third-party sales supplier using a general journal entry:

    • Credit the Loan Payable Account: This reduces your loan liability.
    • Debit the Refunds or Sales Returns Account: This recognizes the reduction in sales due to the refunds provided by your partner.

    The entries would look something like this:

    • Credit: Loan Payable Account (to reduce the loan balance)
    • Debit: Sales Returns and Allowances Account (or a similar account used for recording refunds and returns)

    The Sales Returns and Allowances account is typically used to track the reduction in sales due to refunds and returns, which aligns with the nature of the transaction you're describing. This way, your financial records will accurately reflect the reduction in the loan liability and the corresponding reduction in sales due to refunds.

    Here’s an example journal entry:

    Date Account Debit Credit
    [Date] Sales Returns and Allowances $X  
      Loan Payable   $X

    Replace [Date] with the actual date of the transaction and $X with the amount of the loan repayment associated with the refund.

    Feel free to post again, we're happy to help!

    Regards,
    Earl

    • Kelbel6's avatar
      Kelbel6
      Contributing User

      Cheers Earl.

      Thanks for the feedback and the clarification

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