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rachellkelleyy
January 14, 2020
Question

Refund to credit card from vendor for over payment

  • January 14, 2020
  • 1 reply
  • 0 views

Hello,

Last month we got an invoice for material which the vendor needed a 50% deposit for. We paid the 50% deposit by credit card. Once the order was ready for pick up (this month) we were to pay the other 50% of the invoice due.  The vendor ran our card for the full amount of the invoice by mistake.  They issued a credit card refund for the 50% over payment. How do I post the over payment for last month's reconciliation purposes and also record the credit card refund for this months reconciliation? I currently have a negative balance in this vendor's "open balance" due to the over payment just sitting there since I recorded it as a bill payment for the time being. 

1 reply

AddieC
AddieC
January 14, 2020

Hi rachellkelleyy, 

 

QuickBooks Online gives you the flexibility to deal with whatever you may be facing with your business bookkeeping. You can record bills, make payments, and record refunds from your supplier quickly and easily. I'll help explain how you can record the overpayment, as well as record the refund from your supplier. 

 

It sounds like you've recorded the overpayment by clicking "Make Payment" on your bill. Don't worry, that's the right way to do it! This will cause a negative balance to appear on the vendor, as you've explained in your post. 

 

To remove the negative balance, we need to record the refund from the supplier. There's two different ways to do this, and the method you choose depends on your business. 


If your supplier has issued you a credit for future purchases, follow the steps in this article to see how to Enter a credit from a vendor. This article is from the US Community, but the same steps apply for Canadian accounts. 

 

If your supplier has issued you a refund that you deposited in your bank account, you'll record this by making a journal entry.

 

Follow these steps to reflect the refund using a journal entry: 

 

1. Click + New, then select Journal Entry.

2. In the first line, select the Accounts Payable (A/P) as the Account. Then, credit this account for the refund total. 

3. In the second line, select your Bank Account (whichever account you've deposited the refund to in real life). Then, debit this account the refund total. 

4. In the Name field, choose the Supplier who's refunding you. 

5. Click Save.

 

This will remove the negative open balance for your vendor, which will now be sitting at $0. 

 

I hope this helps get you back on track. If you have any other questions about this, please reach out to our tech support team. 

 

Cheers.

    F
    Foreverlearning
    December 20, 2020

    Hello,

     

    I have a similar question so I thought I would just hop on the thread. I received a credit from my vendor on a return of product that I originally bought with a credit card. 

     

    The credit from my vendor/CC company is appearing on my credit card log and looking to be matched/categorized/labeled a transfer/made into a CC payment.

     

    Is it acceptable/ok if I simply categorize/credit that to COGS as it was originally a debited expense from COGS?

     

    Thanks very much

    Rebecca R
    Rebecca R
    December 21, 2020

    HI there Foreverlearning,

     

    Welcome to the QuickBooks Community. Recording an overpayment or a refund from your supplier is an important step in ensuring that your books are balanced. Using the bank feed to match or categorize the amount showing can be handy, but I want to explore this with you further.

     

    The best way to record this refund from your supplier is to use the + New button to record a Credit card credit since the amount was refunded back to your card. Once recorded, you should be able to match the credit within the banking feed as long as the date, account, and amount match up. If you're unable to find a match, simply exclude the transaction from the bank feed. To do that select the checkbox for it, then hit Exclude. The only difference this will make to your books is that the transaction won't automatically be checked off during your monthly reconciliation. 

     

    If you'd like to find a different way to categorize this transaction, I'd recommend consulting with your accountant. The COGS account tracks the costs of the goods that you sell, and since this was a refund and you didn't actually receive a product or service from your supplier in exchange for the amount, recording it against COGS might not be best practice. Your accountant will be able to advise you on this and help you select the most appropriate account for your business.

     

    If you're not working with an accountant yet, you're in luck. We have a database of QuickBooks-certified accountants that'd be happy to support you and point you in the right direction. To find one in your area navigate to the My Accountant tab and use the Find a pro to help button. 

     

    You'll have this sorted out in no time. Have a great week!

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