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Business20
August 13, 2019
Question

Adding credits to expense account

  • August 13, 2019
  • 2 replies
  • 0 views

Hi There,

 

I'm looking for a bit of help, this may seem like I silly question but is it normal to add payments received into an expense account?

 

Basically I have an expense account for postage and in the past I've cancelled some labels and received a refund of the amount later down the line, can I just add this refund (payment received) into the same expense account the original payment was assigned to?

 

Also wondering if the same would apply to my sales account - sold some items, categorised the payment received as a sale, but if I processed a refund for the transaction (full or partial) would I add this sent payment into the same account?

 

Thanks, I hope that makes sense

2 replies

R
Ryan_M
August 13, 2019

Hi @Business20,

 

Let me help by clearing things up a bit for you.

 

If you've received a refund for your expense, we can consider the person or business who received your expense as your supplier. With that said, I have a couple of situations for supplier refunds.

 

If it's for a returned inventory item, record a supplier credit.

 

Here's how:

  1. Select the Plus (+) icon, then select Bank Deposit.
  2. In the Add other funds to this deposit section, fill in the following fields:
    • Received from: Enter the appropriate supplier name.
    • Account: Select the Accounts Payable account.
    • Amount: The cheque amount.
  3. Select Save and close.

We'll then need to link the deposit to the supplier credit. Let me show you how:

  1. Select the Plus (+) icon, then click on either Expense or Cheque.
    • Note: Both Expense and Cheque recognise and record expense. When you use Cheque, the transaction created is added to the list of cheques that you can print.
  2. In the Choose a payee drop-down, enter the supplier name.
  3. Leave the Reference / Cheque #, Date, Amount and Memo fields blank. These fields are optional.
  4. From the Add to Expense or Add to Cheque section, select Add for the outstanding supplier credit and deposit.
  5. Select Save and close.

The other scenario is when you pay your bills using supplier credits. You can find that in this article right here: How do I handle supplier credits and refunds?

 

On the other hand, if you want to correctly record a customer's refund, you can view this article: Record a customer refund. Same as what I provided above, this article has steps on how you can properly record a customer record, for 2 different situations as well.


Should you have other questions in mind, or if you have clarifications, don't hesitate to post them in the comments below. I'll get back to you as soon as I can.

B
Business20Author
August 14, 2019

Hi There,

 

Thanks for getting back to me.  I'm still a little confused, I understand the steps you've outlined above but the credit has already appeared in my account so would I still need to create a refund receipt like you've detailed?

 

I paid for postage using eBay's shutl service, which shows as -£1 (i.e £1 sent) in my Paypal account.  I cancelled this label and received a refund 10 days later which shows as +£1 (i.e £1 received) in my Paypal account.  Can I not modify the £1 received transaction to show as a refund?

 

Kind Regards,

 

G
GeorgiaC
August 14, 2019

Hey Business20,

 

If you have already recorded the initial postage expense in QuickBooks, to correctly record the refund you would need to create a supplier credit and bank deposit with the details outlined above, which will then offer a match to the transaction in the Banking  for review tab.

 

There is no way to allocate the payment directly from the banking to show as a refund on the suppliers account, as if you posted this to the creditors account it would show incorrectly as an un-applied credit payment.

 

Please let me know if you have any further questions, 

 

Thanks

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