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Returns - new transaction rows
Returns - new transaction rows
Tracey Newman avatar
Written by Tracey Newman
Updated over a week ago

Our most recent A2X update includes a release to support the new Shopify returns functionality - you can read more about Shopify's returns release here.

Shopify now allows in built functionality for merchants to manage the returns process - which allows customer (or the merchant via the back end), to advise of an upcoming return (return in progress) and has introduced automation to allow the merchant to restock and/or refund, or provide an exchange item for the return.

Each of these activities have accounting implications for the Shopify business. In addition, the Shopify finance summary returns row is updated at the time of return notification. In order to allow our customers to make decisions about how they wish to map a return notification, A2X has created a number of new transaction detail rows.

It is important to clarify the terminology "return" and "refund" in relation to Shopify.

  • A "return" is a notification by a customer that they intend to send the purchased item back to the merchant.

  • A "pending return" is a notification from the customer to the merchant that an item has not yet been received, or closed off in Shopify.

  • A "refund" is when consideration is returned to the customer, that is not associated with a return or is the result of refunding a line item(s) within a pending return.


When a return is initiated by a customer the merchant can deal with this in a few different ways:

  1. The merchant can refund the item by returning all or part of the payment to the customer.

  2. The merchant can offer a store credit or gift certificate to use in the future.

  3. The merchant can do nothing, perhaps because the item cannot be refunded or exchanged according to the terms of the sale.

  4. The merchant may exchange the item and refund/charge any difference between the returned and exchanged item.

Please refer to the following example to understand where Shopify (and therefore A2X) presents each amount within their finance summary:

Date

Event

Presented in Summary Report

Day 1

Sale of Green T-Shirt

Gross Sales (+)

Day 1

Discount on Green T-Shirt

Discount (-)

Day 1

Tax Collected on Green T-Shirt

Taxes (+)

Day 2

Return Notification advised - (amount net of tax)

Returns (-)

Day 2

Return Notification advised - (tax amount)

Taxes (-)

Day 3

Exchange processed on sale (for new item value)

Gross Sales (+)

Day 4

Refund paid for difference between original item and exchanged item

This does not show up in the summary report on Day 4, it will be reflected in the net change between Day 2 and 3

In order to roll out this change, A2X has introduced new transaction detail rows. If you have auto-mapping enabled, the new detail rows will inherit the mapping information from the original auto-mapped transaction category. You can of course change the detail of the mapping to another general ledger code within the accounts and taxes section.

If you have auto-mapping disabled, you will need to ensure that you allocate your choice of general ledger code to each new transaction row prior to sending each payout to your accounting ledger. Please note the fourth column is a suggestion only and it is best to confirm with your accountant or bookkeeper.

Transaction Detail

What is this?

Transaction Category

Balance Sheet or P&L?

DutyReturn

The duty on the return item

Other

P&L

DutyReturnTax

The amount of the tax applicable to the duty on the return item

Other

Balance Sheet

Pending Payments

Merchant has been advised an item is being returned

PendingReturn

Balance Sheet

ReturnAdjustment

The difference between a return and the amount refunded, net of applicable taxes

Refunds

P&L

ReturnAdjustmentExcludingTax

The difference between a return and the amount refunded (where no tax was charged originally)

Refunds

P&L

ReturnAdjustmentNotTaxed

The difference between a return and the amount refunded (where no tax was charged originally)

Refunds

P&L

ReturnAdjustmentTax

The amount of the tax applicable to the return adjustment

Refunds Tax

Balance Sheet

ReturnDiscountExcludingTax

The amount of a discount that was applied to the return, net of applicable taxes

Discounts

P&L

ReturnDiscountNotTaxed

The amount of a discount that was applied to the return (where no tax was charged originally)

Discounts

P&L

ReturnDiscountTax

The amount of the tax applicable to the discount on the return item

Discount Tax

Balance Sheet

ReturnExcludingTax

The return amount, net of applicable taxes

Refunds

P&L

ReturnNotTaxed

The return amount (where no tax was charged originally)

Refunds

P&L

ReturnShippingFee

The fee charged by the merchant to the customer for shipping the returned item

Shipping Income

P&L

ReturnRestockingFee

The fee charged by the merchant to the customer for restocking the returned item

Other

P&L

ReturnTax

The amount of the tax applicable to the return

Refunds Tax

Balance Sheet

ShippingReturnExcludingTax

The amount of shipping revenue relating to the return, net of applicable taxes

Shipping Income

P&L

ShippingReturnNotTaxed

The amount of shipping revenue relating to the return (where no tax was charged originally)

Shipping Income

P&L

ShippingReturnTax

The amount of the tax applicable to the shipping on the return

Shipping Tax

Balance Sheet

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