Looking for a bit of guidance, please. I have a prepayment amount of £5 against one of my clients. Came about where a small job I did came to £35 but client paid me £40. Normally I would offset this against the next invoice but, for various reasons, the client has to relocate away from the area and no longer requires my services and therefore I know I won’t be able to ‘pay’ him back this money. What book entries do I need to do to ‘remove’ the £5?
If you’re just keeping the money then the simplest would be to create a £5 invoice for that customer and log payment → apply from credit. This will recognise the £5 as additional income, which it is.
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