How do I apply one customer's account credit to another customer's account?

We'll have to create a journal entry and apply the customer's credit to the other account to record the transactions, Juliejohn. I'm here to help and walk you through the steps. 

To add the entry:

1. In QuickBooks Online (QBO), navigate to the Plus menu in the upper right and choose Journal entry under Other.  
2. Key in the date in the Journal date field.
3. Click the Account dropdown on the first line item and choose Accounts Receivable (A/R).
4. In the Debits field, type the amount being transferred and enter the reason for the journal entry in the Memo field,
5. Click on the Name dropdown menu and choose the name of the customer to whom the credit will be transferred.
6. On the second line item, choose ) Accounts Receivable (A/R) from the Account dropdown list. This action will display the credit amount and the memo.
7. Tap the Name dropdown and select the customer's name to which the credit is being transferred to.
8. Click the Save button.

Now that we've added the entry, follow these steps to apply the credit:

1. Go to the + New menu and choose Receive Payment under Customers.
2. Select the name of the customer the credit was transferred from.
3. In the Outstanding transactions section, review the journal entry you've created.
4. Under Credits, check the credit memo you need to transfer.
5. Press the Save and close button. Note: This removes the credit from the customer you are transferring the money from.)
6. Head back to the + New menu and choose Receive Payment under Customers.
7. Select the name of the customer that the credit was transferred to.
8. In the Outstanding Transactions section, pick the invoice you want to allocate the credit.
9. Under Credits, search and check the entry you created.
10. In the Payment column, enter the amount of that credit you wish to apply.
11. Press the Save and close button.

For additional resources, open each article below to learn more about managing customers' refunds, credit, and overpayment:

• Handle a customer credit or overpayment in QuickBooks Online
• Record a customer refund in QuickBooks Online

Explore these links for more insights on how to handle your business cashflow, along with other sales and customer-related transactions:

• Invoices and payments
• Sales and customers

Feel free to visit the Community again if you have additional questions about managing your customer's credit and other product concerns. We're here to make sure you're well taken care of.