Refund of $100 allocated to a taxable credit
This table shows the credit refund:
| Account | Value |
|---|---|
| Debit rates control account | 100 (control account applicable to credit transaction) |
| Credit tax accrual account | 9.10 |
| Debit tax cash account | 9.10 |
| Credit refund account | 100.00 |
Crediting the tax accrual reverses out the entries generated by the actual credit transactions.
Debiting the tax cash assumes that when a payment is received, the credit entry is then generated.
Note: It is uncommon for a refund to be allocated to a
credit in current Pathway modules and future refund processing. A refund is always allocated
to a payment first and only when the refund amount exceeds the amount of all receipts on the
record. A record such as assessment, application, or license is treated as a refund of a
credit. In some situations, a refund can be allocated partly to receipts and credits.
The main example of a credit refund in Rates is where a previous period rebate is processed and the assessment is fully paid at year end. A refund is required as opposed to allowing the credit to reduce the balance payable. Or, where the previous period rebates cover many years and exceed the current years rates.