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PBJ10
December 12, 2024
Question

Record Refund for Unapplied Credit

  • December 12, 2024
  • 2 replies
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According to the QBO resources, there used to be a simple way to record refunds and then link an unapplied payment to the transaction. That seems to be long gone.

 

Let's say the customer paid $3000 by credit card over a month ago as an unapplied credit. That amount needs to be refunded. 

 

Creating a Refund Receipt creates a CREDIT on the account. So now the customer records show $6000 credit. Where is the simple transaction that will create a DEBIT that can offset the original credit leaving the customer with a $0 balance?

    2 replies

    Rainflurry
    Rainflurry
    December 12, 2024

    @PBJ10 

     

    A Refund Receipt doesn't work because you need to assign the payment to A/R and QB won't let you assign A/R to a Product/Service which is required for a Refund Receipt.  Use an Expense or Check transaction and assign A/R to the payment.  Then, go to New > Receive payment and apply the credit to the check.      

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    PBJ10Author
    December 12, 2024

    Thanks for replying @Rainflurry however this still doesn't solve the problem.

     

    1. Yes, I understand why the Refund Receipt transaction won't work. My question for QBO is why does it work that way? WHY does the transaction option exist if QBO does not allow us to assign it as the proper type?

     

    2. Our client would love to be able to create an expense or check that would offset the credit, however even after creating the check, the expense does not show up where they would expect it to be. After clicking "New Transaction" and then "Payment," the only available transactions to apply the credit on are open invoices. How can the client create a debit that will then appear as an option on the "Open Transactions" page that would allow the credit to be aplied?

    Rainflurry
    Rainflurry
    December 12, 2024

    @PBJ10 

     

    "My question for QBO is why does it work that way? WHY does the transaction option exist if QBO does not allow us to assign it as the proper type?"

     

    A Refund Receipt is used when issuing a refund for a product or service which cannot be assigned to A/R.  Why does it work what way?  I don't know, I'm just a fellow QB user like yourself.  

     

    "Our client would love to be able to create an expense or check that would offset the credit, however even after creating the check, the expense does not show up where they would expect it to be."

     

    If you create a check and assign A/R to it, it will show as an 'Outstanding Transaction' when you go to New > Receive payment.  You can then apply it to the credit.  Try it. 

     

    "After clicking "New Transaction" and then "Payment," the only available transactions to apply the credit on are open invoices. How can the client create a debit that will then appear as an option on the "Open Transactions" page that would allow the credit to be aplied?"

     

    There is no "Payment" option when you click "New".  There's "Receive payment".  When you click on it, you will see the check listed under 'Outstanding Transaction'.  The Check/Expense transaction debits the account you select under 'Category'.  If you select A/R (you must select A/R for this to work) on the Check/Expense, it creates an A/R debit to apply to the A/R credit created by the original payment.  

     

     

     

     

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    PBJ10Author
    December 12, 2024

    Additionally: What if the client charged a $3000 payment using Quickbooks Credit Card Payments. They then issue a refund THROUGH QUICKBOOKS back onto the customer credit card. This transaction automatically created a Refund Receipt which is, for some reason, a CREDIT.

     

    Why? How can they apply the original Quickbooks credit card payment to the Refund Receipt?

    Rainflurry
    Rainflurry
    December 12, 2024

    @PBJ10 

     

    "Additionally: What if the client charged a $3000 payment using Quickbooks Credit Card Payments. They then issue a refund THROUGH QUICKBOOKS back onto the customer credit card. This transaction automatically created a Refund Receipt which is, for some reason, a CREDIT.

     

    Why? How can they apply the original Quickbooks credit card payment to the Refund Receipt?"

     

    What Product/Service is on the Refund Receipt?  Whatever account is assigned to that Product/Service on the Refund Receipt, reclassify it to A/R for that customer.  There are many ways to do that.  The easiest is with a journal entry: debit A/R for that customer then credit the account that is assigned to the Product/Service.  Apply the A/R debit created by the journal entry to the A/R credit from the original payment by going to New > Receive payment.   

     

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    PBJ10Author
    December 12, 2024

    Thanks @Rainflurry I complete understand everything you're saying. But you understand why these steps are wholly unnecessary, right? 

     

    We don't really want clients messing around with journal entries. Especially when that's the point of having the integrated features within Quickbooks. If the client correctly uses the Quickbooks Credit Card Payments refund feature, why would they then have to record MULTIPLE MORE TRANSACTIONS to correctly balance the account? Why didn't Quickbooks record it appropriately?

     

    There used to be a much simpler process for this where clients could simply match the refund to the credit, so I cannot figure out why the refund feature now records the transaction this way.

     

    Therefore I would appreciate an explanation from Quickbooks as to why the system records the refund as a credit.

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