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How do you record a payment that is less than a refund?

How do you record and account for a payment that is less than a refund? Ex: Customer A paid $2,500 but we refunded Customer B $3,000 on the same day. Our bank statement only reflects $500 under withdrawals.

Note: We do not process payments using QB. We use a different vendor.

Best answer 03-19-2019

Accepted Solutions
QuickBooks Team

Re: How do you record a payment that is less than a refund?

Hi there, blanca garcia.

 

It's a pleasure to have you join us here in the Community. I'm by no means an accounting professional, but I do have some insight to provide that can help get you on the right track.

 

Based on the situation that you've mentioned, you may need to use a Clearing account to record these transactions. To give you an overview, you'll use this account to record the payment ($2500) and refund ($3000) which will create a negative balance of $500.

 

Then, to offset this and reflect the $500 on your bank statement, you'll need to write a check for this amount and apply it to the Clearing account. The steps below will guide you through the process:

 

Setting up the Clearing account

  1. From the Lists menu, choose Chart of Accounts.
  2. Click the Accounts drop-down menu, then select New. You can also press Ctrl + N.
  3. Select Bank, then Continue.
  4. Name the account, for example, Clearing.
  5. Click Save & Close.

Recording the payment

  1. From the Customers menu, select Receive Payments.
  2. Choose "Customer A" in the Received From menu.
  3. Check the invoice where the payment should be applied to.
  4. Click the Deposit To drop-down menu, then pick the Clearing account.
    - If you don't see this menu, you'll need to go to the Edit menu and select Preferences. In the left navigation menu, choose Payments and go to the Company Preferences tab, then uncheck the Use Undeposited Funds as a default deposit to account checkbox.
  5. Click Save & Close.

Creating the refund

  1. From the Customers menu, choose Customer Center.
  2. Select customer B, then double-click the invoice the needs to be refunded.
  3. Click the Refund/Credit icon, then the Use credit to give refund icon.
  4. Choose the Clearing account from the Account drop-down menu.
  5. Hit OK, then Save & Close.

We're almost done. Now, we just need to record the $500 withdrawal. Here's how:

 

Write Check

  1. From the Banking menu, choose Write Checks.
  2. Select your business bank account from the Bank Account drop-down menu.
  3. You can leave the Pay to the order of field blank.
  4. Fill in the following details on these fields:
    - Account: Enter the Clearing account.
    - Amount: Enter the amount that's reflected on your bank statement.
  5. Click Save & Close.

That should do it. However, please be sure to reach out to an accounting consultant to ensure this method is the best suit for your business. With Intuit's Find-A-ProAdvisor site, you can search for certified professionals in proximity to your ZIP code that can discuss options more personal to your business's needs.

 

Please let me know if you need further assistance with this, I want to make sure this is taken care of. Have a great day!

3 Comments
QuickBooks Team

Re: How do you record a payment that is less than a refund?

Hi there, blanca garcia.

 

It's a pleasure to have you join us here in the Community. I'm by no means an accounting professional, but I do have some insight to provide that can help get you on the right track.

 

Based on the situation that you've mentioned, you may need to use a Clearing account to record these transactions. To give you an overview, you'll use this account to record the payment ($2500) and refund ($3000) which will create a negative balance of $500.

 

Then, to offset this and reflect the $500 on your bank statement, you'll need to write a check for this amount and apply it to the Clearing account. The steps below will guide you through the process:

 

Setting up the Clearing account

  1. From the Lists menu, choose Chart of Accounts.
  2. Click the Accounts drop-down menu, then select New. You can also press Ctrl + N.
  3. Select Bank, then Continue.
  4. Name the account, for example, Clearing.
  5. Click Save & Close.

Recording the payment

  1. From the Customers menu, select Receive Payments.
  2. Choose "Customer A" in the Received From menu.
  3. Check the invoice where the payment should be applied to.
  4. Click the Deposit To drop-down menu, then pick the Clearing account.
    - If you don't see this menu, you'll need to go to the Edit menu and select Preferences. In the left navigation menu, choose Payments and go to the Company Preferences tab, then uncheck the Use Undeposited Funds as a default deposit to account checkbox.
  5. Click Save & Close.

Creating the refund

  1. From the Customers menu, choose Customer Center.
  2. Select customer B, then double-click the invoice the needs to be refunded.
  3. Click the Refund/Credit icon, then the Use credit to give refund icon.
  4. Choose the Clearing account from the Account drop-down menu.
  5. Hit OK, then Save & Close.

We're almost done. Now, we just need to record the $500 withdrawal. Here's how:

 

Write Check

  1. From the Banking menu, choose Write Checks.
  2. Select your business bank account from the Bank Account drop-down menu.
  3. You can leave the Pay to the order of field blank.
  4. Fill in the following details on these fields:
    - Account: Enter the Clearing account.
    - Amount: Enter the amount that's reflected on your bank statement.
  5. Click Save & Close.

That should do it. However, please be sure to reach out to an accounting consultant to ensure this method is the best suit for your business. With Intuit's Find-A-ProAdvisor site, you can search for certified professionals in proximity to your ZIP code that can discuss options more personal to your business's needs.

 

Please let me know if you need further assistance with this, I want to make sure this is taken care of. Have a great day!

Experienced Member

Re: How do you record a payment that is less than a refund?

That did it! Thank you so much!

Highlighted
QuickBooks Team

Re: How do you record a payment that is less than a refund?

Glad to hear that worked for you, blanca garcia. The Community always has your back if you ever need assistance in the future. Take care.