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N
NR97
October 19, 2024
Question

How do I categorize a refund?

  • October 19, 2024
  • 1 reply
  • 0 views

I'm constantly buying from Amazon and Home Depot online and get charged immediately but sometimes my orderds get canceled and the store deposits the money back to my bank account. I don't know how to approach this in QBO, thought I could tag it as "Refunds to costumers" but it appears that category is for business that sell goods, which is not my case. How to categorize this types of refunds? They should be income and not an expense... Has anyone figured this out? Help much appreciated.

1 reply

K
KimAnnVA
October 19, 2024

I work with many clients who purchase and return job materials all the time.  I find the cleanest method for profit and loss is to apply the sale to the same account.  

 

Example : 

$100 Purchase at Lowes recorded as "Lowes" with classification "Job Materials and Supplies"

$40 Refund from Lowes recorded as "Lowes" with classification "Job Materials and Supplies"

 

When you go to your profit and loss if you click on all "Job Materials and Supplies" transactions you will see both transactions, one is creating an expense and one is crediting the expense account.  

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