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HM Accountax Ltd
HM Accountax Ltd, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 135
Experience:  I am an accountancy professional with more than10 years hand on experience in audit, accountancy and tax affairs.
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When a merchant refunds an item it still incurs transaction

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When a merchant refunds an item it still incurs transaction fee so in that case the cost of expense exceeds the cost of sale ? so how's that reported in the financial statements of the business?

Hi,

I am an advisor at Just Answer and i am pleased to assist you.

Could you please kindly provide more details about your query.

Regards

Muhammad

Customer: replied 4 days ago.
take eBay for instance ebay earns a selling commission for £10 and incurs a Paypal transaction fee of £1 and when it makes a refund it will be paying to the consumer £10 so the total expense become £11, as transaction fee is not paid back to seller, which is higher than the sale "£10" what account is used to report the returns and the transaction associated with it?

The £1 PayPal charges will be included in accounts as bank charges.

I hope it makes sense.

Regards

Muhammad

Customer: replied 4 days ago.
Ok and lastly will the turnover be £10 or £9 as that's what's received in the bank?

Turnover will be £10, which will net off against £10 refund and £1 PayPal will go to bank charges.

Customer: replied 4 days ago.
Ok got it so resulting in a loss of £1 thanks

Yes.

If you have any further queries then please feel free to contact me.

Regards

Muhammad

HM Accountax Ltd and other Tax Specialists are ready to help you