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Cancellation charges/fees

04 February 2023

a firm supply some goods to customer but due to some reason it was cancelled by customer and firm refund the 80% amount and charge 20% as cancellation fees
how do we record it ?

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9 Replies

CA Rashmi Gandhi (Chartered Accountant) (86469 Points)
Replied 04 February 2023

Whether you want journal entry or manner to deal such transaction.

2 Like

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Sumit (Accountant) (22 Points)
Replied 04 February 2023

I think firm should be raise the invoice of charges and buyer must get itc on this transaction.

CA Rashmi Gandhi (Chartered Accountant) (86469 Points)
Replied 04 February 2023

I don't think the query is for GST

Yasaswi Gomes new (Finance ) (4545 Points)
Replied 04 February 2023

What is everyone talking here. There is assurance type warranties and service type warranties and cancellation provisions involved here. Plus customer options!

1 Like

Yasaswi Gomes new (Finance ) (4545 Points)
Replied 04 February 2023

I forgot the main thing,

Cr cancellation charges

Dr. Customer/debtors/receivablez

1 Like

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Yasaswi Gomes new (Finance ) (4545 Points)
Replied 05 February 2023

Sale 100, refund 80, cancellation, 20!

It's like a ...

Debtor Dr. 100

Cr sales 100

Cr. Note 80

Dr. Sales 80

And

Dr loss on customer cancellation

Cr. Bank.

But

Bank 20 Dr

Sales 20 Cr

I'm a genius!

1 Like

sabyasachi mukherjee (27746 Points)
Replied 05 February 2023

It's ridiculous. Is it under a contract?

1 Like

Atharv Sankliya (1359 Points)
Replied 06 February 2023

I want to ask that whether the whole transaction of sale is reversed and then we book the cancellation charges as income ,or just reverse the transaction at 80%

2 Like