17 Nov Customer Refund
Posted at 00:13h
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Customer Refunds
- There are two different reasons why a customer may be due a refund, and each is handled differently in QuickBooks.
- 1. Overpayment – When the transaction to receive the payment was recorded and the payment was greater than the amount due on the invoice, the difference is designated as an unapplied amount. On subsequent reports, this overpayment is shown as a negative amount. To refund this amount to the customer, create a check (Banking > Write Check) payable to the customer and code to the Accounts Receivable account on the expense tab. Once recorded, the result is that the customer balance is zero. To link the refund and overpayment, enter a zero balance receive payment.
- 2. Refund for adjustment or return – to correct the item and sales tax, if appropriate, it is necessary to create a credit memo to reduce the general ledger accounts appropriately, and ensure proper results on future reports. If the difference is to be applied to future invoices, once the information is entered on the credit memo, click OK. If the difference is to be refunded, enter the credit memo and then click on the refund button. QuickBooks will automatically create the check for you. If using the QuickBooks merchant service there is also an option to process the credit on the customer’s credit card.
TRICK: If the item returned or to be adjusted is an inventory type item, the quantity will be added back to inventory. Be sure to create an allowance or adjustment item if the customer is to be credited or refunded an amount but the goods are either not returned or not saleable.