Non-routine transactions in Sage 50 US - Refunds From Vendors

I’m going to do a series of blog posts on non-routine transactions. We all run into them from time to time. Just when you start feeling like you really know your way around Sage 50 something like this will pop up. It could be a bounced check from a customer; or the opposite problem, an over-payment from a customer; or any number of things including this post’s topic - a refund from a vendor. These are all a normal part of business, but probably not part of your daily routine. I’ll try to arm you with the knowledge you’ll need when one of the pesky events pops up.

If there’s a type of transaction that you’d like to see covered send me a private message, leave a comment below, or email me at [email protected].

So how do you record a refund from a vendor in Sage 50? It’s not hard but you’re probably so used to ignoring the option that you don’t even realize it’s there. And you don’t have to resort to using a general journal entry or setting the vendor up as a customer. Let’s look at a couple of scenarios.

In most cases this will be a two-step process. (1) Receive the money (2) Deal with the balance created by that receipt.

For step 1, open the Receive Money window (Tasks menu > Receive Money). There’s a drop-down list to the left of where you normally enter a customer ID. That is what most people overlook. Open that list and change it to Vendor ID. Now you can select a vendor ID instead of a customer ID.


Complete everything else in the upper half of the screen just as you would for a payment from a customer. In the bottom half of the screen, the Apply to Vendor Account tab will already be selected. You can enter a description if needed. The GL Account will automatically be set to the accounts payable account; Do NOT change it. If you set the GL account to anything other than Accounts Payable your aged payables report will no longer match the Accounts Payable balance on your general ledger. Just enter the amount and click Save.

When you get a refund from a vendor, it’s usually because you had an outstanding credit with them. So step 2 is to apply the refund to the credit. You’ll do this in the Payments window (Tasks menu > Payments). Enter the vendor ID, a dummy check number (you could use the refund check number if it isn’t similar your own check numbers) and the date. On the Apply To Invoices tab, the receipt you just entered will show up as if it was an invoice with the check number displayed in place of an invoice number. Check the Pay box on its line and check the Pay box for the related credit memo. The net payment amount will be zero.

If there is no credit memo, you can either stop and enter one (Tasks menu > Vendor Credit Memos) or select the Apply To Expenses tab and enter a negative amount to offset the amount of the refund, as shown below. The GL Account should be the relevant expense account. Or if merchandise was returned, use the Item ID for the returned item with a negative quantity so that inventory will be corrected. When you’re done, the total payment amount should be $0.

There’s another method that only requires one step but it has a drawback that I’ll explain at the end.

Once again, you’ll start in the Receive Money window (Tasks menu > Receive Money). Skip over the Customer ID/Vendor ID entirely and simply type the name of the vendor/payer into the Name field. Complete the rest of the top half of the screen like you normally would. On the Apply To Revenues tab, enter a description, GL account, and amount. Click Save and you’re done.

The second method is fast and simple but only appropriate for what I would describe as a miscellaneous receipt, and here’s why. Since you don’t enter a vendor ID, this transaction won’t be linked to a vendor or show up on any vendor reports. That makes it harder to find later. It also means you can’t apply it against an open credit memo. Save this method for oddball items that you might be tempted to record as a general journal entry. At least this way they’ll show up on the cash receipts journal and can be grouped in with other checks that were deposited together.


   Steve Collins (aka StephenC)
  Sage 50 U.S. Certified Consultant
  IQ Accounting Solutions LLC

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