Accounting for Apple iPhone Upgrade Programme

Really this is a two part question - firstly understanding what I should have done and then sorting the mess from what I did!

Apple iPhone Upgrade Programme
The upgrade programme provides a new iPhone each year, for a monthly payment through Barclays Finance. So what I did was create a supplier invoice for (e.g.) £1200, record the first payment of £69 against it and then each monthly payment when it appeared on my statement.

At the end of the year I returned the phone to Apple and was credited the amount to pay off the remainder of the finance. So the HP was paid off and I was free to start a new arrangement on a new phone, which I did.

My question is how should I account for the return of the phone? What I have done at the moment is recorded (in my current account) a refund of the money from the supplier, and attributed it to that invoice, and also recorded a payment against the invoice. This gives me two spurious entries on my current account that won’t appear on my bank statement so I’m wondering if I should have recorded it differently?

And what went wrong
During the year I switched current accounts so the first six payments were made from TSB and the second six from Santander. What I didn’t notice is that the automatic tagging on the Santander transactions generated automatic individual purchase invoices rather than paying down the original invoice. I’ve untagged the transactions and applied them to paying down the original invoice, but am unable to delete some of the spurious individual invoices because I have submitted a VAT return since and they appear to now be locked. So they are showing as overdue. Any suggestions how to resolve this?

You can’t delete invoices that are locked to a vat return but you can credit-note them (under “more options” on the invoice details page), just make sure you keep notes to explain what you did if you get inspected.

Thanks Ian. Was I correct in my approach to the first part? Should I have just raised a credit note for the returned phone rather than running it through the bank account as a payment in and out?

If you raise a credit note from the invoice itself then that should give you the option to reduce the unpaid balance directly rather than having to pay and refund.

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