Can I create a "Credit" account in "Chart of Accounts" to track vendor credits?

Hello SVOhio!

I know how to record vendor credits. Let me help you.

Yes, you can create a new account on your Chart of Accounts. However, please note that QuickBooks Desktop uses the default accounts payable to track the vendor credits. You can also apply these credits to your open bills.

Here's how to create the credit:

1. From the Vendor menu, select Enter Bills.
2. Select the Credit radio button and the Vendor.
3. Go to the Expenses tab and select the Account from the original bill.
4. In the Amount column, enter the appropriate amount for each account.
5. Tap Save & Close.

Once done, follow these steps to apply these credits to a vendor by using the Pay Bills:

1. From the Vendor menu, select Pay Bills.
2. Check the bill you want the credits to be applied to.
3. Select Set Credits and apply the credit you created earlier, then select Done.
4. Tap Pay Selected Bills, then select Done.

Additionally, here are some of the articles you can check. These will show you more info about adding a new account and handling vendor refunds:

• Record a vendor refund in QuickBooks Desktop

• Add, edit, or delete accounts in QuickBooks Desktop

You'll want to seek some help from your accountant in setting up your Chart of Accounts.

Need more help? Keep on posting here and we'll assist you. Thanks!

Hi AlexV!

Thanks for the reply and the steps. I understand that I may not need to create the "Credits" account in the Chart of Account and follow the steps in in the entry of a credit. I think the light bulb may have just gone off and I'm making this harder than needed, ha! My concern was what if my credit covers a different expense account that is typically billed by that vendor, or multiple expense accounts -- but I think I understand now.

Making sure I understand, for example, purchases made at hardware store. If I understand correctly, if I have a $20.00 credit for a purchases that involved say, $5.00 to office supplies and $15.00 to buildings and grounds, I simply list those itemized to the accounts which they initially were listed as an expense?

Hi there, SVOhio.

I'd like to share what I know about vendor credits.

You're right, as long as you select the items or the affected account when applying the credit . You may also check each scenario on the article provided by my colleague AlexV above: Record a vendor refund in QuickBooks Desktop

You can also pull up  the Transaction List by Vendor report to make sure the credits are applied correctly.

Here's how:

1. Go to Reports Menu.
2. Choose Vendors & Payables.
3. Select Transaction List by Vendor.
4. You can click on the Customize Report button at the top to filter the report.

Also, you can find these transactions in the vendor's profile. The credit is posted in the Balance Total column.

I've included this article for your future reference: Accounts Payable workflows in QuickBooks Desktop.

Let me know if you still have questions or clarifications about vendor credits. I'll be here to help. Keep safe!