How would you record a payment TO a customer that is more than their original payment?

Thanks for reaching out about recording refunds, particularly in a unique situation you've described involving a general contractor for a flooring project, KimC22.

To clarify, can you tell us if you're a bookkeeper managing the books for the customer or the general contractor?

If you're managing the customer's account, you normally record vendor refunds as a bank deposit in QuickBooks Online. Let me share these steps with you:

1. Click the + New button and select Bank deposit.
2. Scroll-down to the Add funds to this deposit section. Enter the amount refunded by the vendor and choose the account that you selected on the initial expense or check.
3. If this refund was for an expense that you linked to a customer or project, check the box Track returns for customer, then select the customer or project. That way, your costs will not be overstated.
4. Enter all other details of the refund.
5. Click Save and close. 

Here's an article about recording refunds for more details about this process: Enter Vendor Credits And Refunds In QuickBooks Online.

However, your situation is more complex than a standard vendor refund. The contractor's balance will only be affected if the account used in the refund is Accounts Payable (A/P).

You can also follow these steps if you're managing the books for the contractor: 

1. Click the + New button and select Refund receipt or Give refund.
2. Choose the name of the customer in the drop-down list for Customer.
3. Select the Refund From ▼ dropdown, then select the bank you deposited the payment for the invoice to.
4. Choose the service item they used in the Product/Service column.
5. Make sure to fill the date, quantity, rate, amount, sales tax, and other fields accordingly.
6. Click Save and close.

However, we recommend consulting with an accountant for tailored advice on how to accurately record this as a loss on their records. They can provide guidance on the most appropriate way to handle this in your specific circumstances, ensuring it's correctly recorded for both financial and tax reporting purposes.

Feel free to check out these articles in case you need more resources about managing customer and vendor-related transactions in QBO:

• Print A Customer Or Vendor Register In QuickBooks Online

@KimC22 

That's a good GC.  IMO, you have a couple options depending on how you want this to show on the GC's books.  If you want to reduce revenue by the $9K original invoice, I would assign $9K of the $17K payment to the same revenue account as the original invoice and then book the remaining $8K to the appropriate expense account.  Or, you can leave the original $9K invoice as revenue and book the entire $17K payment to the appropriate expense account.  Either way works as they both reduce net income by $17K and I believe both are technically correct.