Question

Best Way to Transfer Customer Credit to a Different Income Account

5 replies
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A customer had a $5,000 credit memo linked to their Membership Dues after applying it to all open invoices. Now, they want to transfer that credit to the Capital Campaign Fund to reflect it as a donation.

Since no actual cash was received, what’s the best way to move this amount so:

1. The customer's credit balance is reduced accordingly.

2. The Capital Campaign Fund income account reflects the $5,000 contribution under the customer’s name.

I want to ensure this is properly recorded in QuickBooks Online and connected with the customer name in reports. Would a journal entry be the right approach, or is there a better way?

Thanks in advance!

QuickBooks Online

Candice C

Hey there, @Lphilip.

Welcome back to the Community!

A journal entry would be a great start to get the results you want. However, we do recommend speaking with your accountant to ensure this would be the right direction for your business.

If your accountant suggests a journal entry, use the steps below to create one:

Go to the + New button.
Tap Journal entry.
On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
On the next line, choose the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
Enter information in the memo section so you know why you made the journal entry.
Press Save and new or Save and close.

Reach back out if you need any more help. I'm only a post away!

Rainflurry

@Lphilip

You do not want to use a journal entry in this case. It won't show properly in the customer center or on reports.

Create an invoice for the customer with the $5,000 Capital Campaign product. Then, apply the credit memo to the invoice to pay it. That's all there is to it.

L

LphilipAuthor

Thanks for your response!

I appreciate the suggestion, but I have a couple of follow-up concerns:

1. Since the credit memo was originally created under Membership Dues, wouldnâ€™t applying it to a Capital Campaign invoice still report the income under Membership Dues instead of Donations?

2. We use cash basis accounting, so I want to ensure this actually moves the revenue to the correct income account. Would QuickBooks properly reflect this, or would I need to reclassify the revenue separately?

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