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Intuit

Record a vendor refund in QuickBooks Desktop

This article will guide you in recording refunds you received from a vendor. Choose the appropriate scenario and follow the recommended steps to record the refund in QuickBooks correctly.

Scenario 1: The vendor sends you a refund check for a bill that is already paid

  1. Record a Deposit of the vendor check:
    1. From the Banking menu, click Make Deposits.
    2. If the Payments to Deposit window appears, click OK.
    3. In the Make Deposits window, click the Received from drop-down and choose the vendor who sent you the refund.
    4. In the From Account drop-down,  select the appropriate Accounts Payable account.
    5. In the Amount column, enter the actual amount of the Vendor check.
    6. (Optional) Enter a memo, check number, payment method and class.
    7. Click Save & Close.
  2. Record a Bill Credit for the refunded amount:
    1. From the Vendors menu, select Enter Bills.
    2. Select the Credit radio button to account for the return of goods.
    3. Enter the Vendor name.
    4. Click the Expenses Tab and enter the Accounts on the original Bill.
    5. In the Amount column, enter the appropriate amount for each Account (the amounts may have to be prorated).
    6. Click Save and Close.
  3. Link the deposit to the Bill Credit:
    1. From the Vendors menu, select Pay Bills.
    2. Check the Deposit that matches the Vendor check amount.
    3. Select Set Credits and apply the Bill Credit you created earlier then click Done.
    4. Click Pay Selected Bills > Done.

Scenario 2: The vendor sends you a refund check for returned inventory items

  1. Record a Deposit of the vendor check:
    1. From the Banking menu, select Make Deposits.
    2. If the Payments to Deposit window appears, click OK.
    3. In the Make Deposits window, click the Received from drop-down and choose the vendor who sent you the refund.
    4. In the From Account drop-down,  select the appropriate Accounts Payable account.
    5. In the Amount column, enter the actual amount of the Vendor check.
    6. Enter the remaining information in the Deposit.
    7. Click Save & Close.
  2. Record a Bill Credit for the returned items:
    1. From the Vendors menu, select Enter Bills.
    2. Select the Credit radio button to account for the return of goods.
    3. Enter the Vendor name.
    4. Click the Items Tab.
    5. Enter the returned items with the same amounts as the refund check.
    6. Click Save & Close.
  3. Link the deposit to the Bill Credit:
    1. From the Vendors menu, select Pay Bills.
    2. Check the Deposit that matches the Vendor check amount.
    3. Select Set Credits and apply the Bill Credit you created earlier then click Done.
    4. Click Pay Selected Bills > Done.

Scenario 3: The vendor sends a refund check that is not related to an existing bill

Examples include rebates, reward incentives, refunds, reimbursements, or checks issued by a vendor to cash out an existing credit.

  1. Record a Deposit of the vendor check:
    1. From the Banking menu, click Make Deposits.
    2. If the Payments to Deposit window appears, click OK.
    3. In the Make Deposits window, click the Received from drop-down and choose the vendor who sent you the refund.
    4. In the From Account drop-down, select the appropriate Accounts Payable account.
    5. In the Amount column, enter the actual amount of the Vendor check.
    6. Enter the remaining information in the Deposit.
    7. Click Save & Close.
  2. Record a Bill Credit for the amount of the Vendor Check:
    1. From the Vendors menu, select Enter Bills.
    2. Select the Credit radio button to account for the return of goods.
    3. Enter the Vendor name.
    4. Click the Expenses Tab and enter the Accounts you would normally use for refunds.
      Note: If you are not sure which account account to select, Intuit recommends contacting your accounting professional.
    5. In the Amount column, enter the appropriate amount for each Account (the amounts may have to be prorated.)
    6. Click Save & Close.
  3. Link the Deposit to the Bill Credit:
    1. From the Vendors menu, select Pay Bills.
    2. Check the Deposit that matches the Vendor check amount.
    3. Click Set Credits and apply the Bill Credit you created earlier then click Done.
    4. Click Pay Selected Bills > Done.

Scenario 4: A vendor sends a refund check on behalf of the original Vendor

  1. Create a deposit for the vendor who sent the refund check:
    1. From the Banking menu, select Make Deposits.
    2. If the Payments to Deposit window appears, click OK.
    3. In the Make Deposits window, click the Received from drop-down and choose the vendor who sent you the refund.
    4. In the From Account drop-down,  select the appropriate Accounts Payable account.
    5. In the Amount column, enter the actual amount of the refund.
    6. (Optional) Enter a memo, check number, payment method and class.
    7. Click Save & Close.
  2. Create a Bill for the Amount of the Deposit and apply it to the Deposit:
    1. From the Vendors menu, selet Enter Bills.
    2. In the Vendor field, select the vendor who sent the refund.
    3. In the Amount Due field, enter the amount of the refund.
    4. Click the Expense Tab.
    5. In the Account field, select a Wash account. (Example would be an expense account).
    6. In the Amount field, enter in the amount of the refund.
    7. Click Save & Close.
    8. From the Vendors menu, select Pay Bills.
    9. Select the Bill and click Set Credit.
    10. Select the Credit and click Done.
    11. Click Pay Selected Bills > Done.
  3. Create a Credit for the Original Vendor:
    1. From the Vendors menu, select Enter Bills.
    2. Select the Credit radio button.
    3. In the Vendor field, select the vendor who sent the refund.
    4. In the Credit Amount field, enter the amount of the refund.
    5. Click the Expense Tab.
    6. In the Account field, select the account used on the original Bill.
    7. In the Amount field, enter in the Amount of the refund.
    8. Click Save & Close.
  4. Create a Bill for the Amount of the Credit affecting the Wash Account and apply the Bill to the Credit:
    1. From the Vendors menu, select Enter Bills.
    2. In the Vendor field, select the vendor who sent the refund.
    3. In the Amount field, enter the amount of the refund.
    4. Click the Expense Tab.
    5. In the Account field, select a Wash account. (Example would be an expense account).
    6. In the Amount field, enter in the amount of the refund.
    7. Click Save & Close.
    8. From the Vendors menu, select Pay Bills.
    9. Select the Bill and click Set Credit.
    10. Select the Credit and click Done.
    11. Click Pay Selected Bills > Done.

Scenario 5: The vendor sends you the refund as a credit card credit

  1. From the Banking menu, select Enter Credit Card Charges.
  2. From the Credit Card drop-down, select the credit card account.
  3. Select the Refund/Credit radio button.
  4. Choose the appropriate Vendor name and enter the Date, Ref No. and Amount.
  5. Enter an appropriate memo to describe the transaction.
  6. If you returned Items, click the Item Tab and enter the Items and Amounts from the refund.
  7. If the refund does not have Items, click the Expenses Tab, select the appropriate Accounts and enter the Amount.
  8. Click Save & Close.