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# Recording a refund in Xero
- URL: https://www.projectinstill.com/refund-xero/
- Published: 2024-10-12T03:04:20.000Z
- Updated: 2024-10-27T01:47:56.000Z
- Description: Teaching kids about recording a refund in Xero bookkeeping.
- Author: Shaf Azam
- Tags: Accounting, #toc, Bookkeeping

💡

This is part of [Project Instill](https://www.projectinstill.com/the-project/), where I teach my kids (12 and 10) financial literacy and business basics.

## What did I want to do?

- I wanted my kids to record a refund that we received.
  - I had cancelled the Elementor plan, for which we received a refund.
- I wanted to introduce the below concepts:
  - When do we get refunds?
  - How to reconcile refunds?
- We have already done the following:
  - Learnt the basics of reconciliation by doing a few [bank reconciliations in Xero](https://www.projectinstill.com/reconciliation-xero/).
  - Recorded multiple combinations of invoices in Xero.

## Refund Transaction in Bank statement

Below is how the refund transaction hit our bank account.

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Elementor-Refund-Transaction.jpg)

A couple of observations:

- The amount refunded was **110.88 USD**.
- The amount that hit our bank account was **181.42 AUD**. *We are expecting to see this value in Xero bank feed import.*
- Even though the transaction says **Value Date: 11/08/2024**, the amount hit our bank account on **14-Aug-2024**.
  - *We expect to see the date 14-Aug-2024 in the Xero bank feed import.*
  - *We expect to see the date 11-Aug-2024 in the Elementor refund document.*

## Refund Transaction in Bank feed appearing in Xero

Below is how the transaction appears in Xero.

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Elementor-Refund-in-RECEIVED-column-in-Xero.jpg)

A couple of observations:

- The amount **181.42** appears in the **Received** column of the left section.
- The bank feed that came into Xero was also dated 14-Aug-2024.

## Refund note provided by Elementor

When I cancelled the Elementor plan, below is the document I received from Elementor explaining to me how much was being refunded.

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Elementor-Credit-Note-for-Refund.jpg)

The refund credit note says that **119.88 USD** is being refunded.

**Note*: GST is not being refunded because GST was not collected in the payment I made when I originally purchased the Elementor plan.*

## How to record a refund in Xero?

💡

You can ****not** enter a ****Bill to pay** with a ****negative (-)** value in Xero.  
  
The refunds will need to be added by creating a new Invoice.

We have to create an invoice.

💡

The kids don't yet have access to creating invoices in Xero.   
  
So, I showed this on my screen. This is a kind of pre-training of invoices.

- Click Business
- Click Invoices

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Business-Invoice.jpg)

Click **New Invoice**

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Xero-New-Invoice.jpg)

Enter the below details:

- To (the company name, in this case, Elementor)
- Issue date
- Due date
- Invoice Number
- Reference
- Description
- Price
- **Account:** Choose the same account you used when you made the purchase). In this example, I chose the same account, Software Annual, and marked it as a GST-free expense.

![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Elementor-Refund-Entry.jpg)

The next step is reconciliation.

We will look at **reconciling the sales invoices** at a later stage.

---

## Next Step

Now it's time to record different types of invoices to see what we can learn next! Check out our next step [here](https://www.projectinstill.com/the-project/).