A/P credit memo from vendor then vendor issued a refund check, how do I clear the credit memo out of quickbooks?

Welcome to the QuickBooks Community, @BKdk78.

I'd be happy to share the steps on how you can record the refund check to clear out your vendor's credit.

Before we begin, I suggest creating a backup copy of your file first to ensure you have the original data you can restore anytime. 

Once ready, refer to these steps:

First, record a Deposit of the vendor check:

1. Navigate to the Banking tab and select Make Deposits.
2. Click OK, if the Payments to Deposit window appears. If not, proceed to the next step.
3. From the Make Deposits window, choose the vendor who sent you the refund on the Received from the drop-down.
4. In the From Account field, choose the correct Accounts Payable account.
5. Enter the amount of the Vendor check in the Amount column.
6. Input the needed details, then select Save & Close.

Next, create a Bill Credit for the amount of the Vendor Check:

1. Click the Vendors menu and select Enter Bills.
2. Tick the Credit radio button.
3. Choose the vendor's name.
4. Select the Expenses tab and enter the Accounts you would normally use for refunds. Note: If you are not sure which account to select, Intuit recommends contacting your accounting professional.
5. From the Amount column, enter the appropriate amount (the amounts may have to be prorated.)
6. When done, click Save & Close.

Lastly, you'll now need to link the Deposit to the Bill Credit:

1. Go to the Vendors menu and click Pay Bills.
2. Select the deposit that matches the vendor check amount.
3. Click Set Credits and apply the Bill Credit you created earlier then select Done.
4. Select Pay Selected Bills and then click Done.

For your reference, please see this article: Record a vendor refund in QuickBooks Desktop.

Also, in QuickBooks, monitoring your business expenses and accounts payable is a breeze. The program has ready-made vendor reports you can open at any time and customize depending on your business needs. 

Post a comment below if you have any other questions about clearing out a credit memo with a refund check. I'm always here to lend a hand. Thanks for dropping by. 

DivinaMercy_N,

Thank you for this information.  I followed these instructions but when I go to the very last step-Go to the Vendors menu and click Pay Bills and select the deposit, the deposit is not there. Why would a deposit show up in pay bills?

Is there something I'm missing?

Also, the vendors account is showing an double the credit now after entering the bill credit as directed in the instructions.. 

Thank you Rae_M,

I have a question, since I already had the credit memo entered from the vendor, do I still Record a Bill Credit for the amount of the Vendor Check?

Thank you for your time

Jumping in to answer your follow-up question, BKdk78.

Since you already created credit to your vendor, no need to Record a Bill Credit for the amount of the Vendor Check. You can proceed to link the deposit and the credit.

Check this article in case you need a handy reference about the whole process of recording a vendor refund: Record a vendor refund in QuickBooks Desktop.

If you need other helpful articles in the future, you can always visit our site: Help articles for QuickBooks Desktop.

Be sure to get back to me if you have other concerns. I'll be here always ready to assist. Wishing you and your business a continued success.

This results in a credit to A/P which is increasing the balance. That doesn't seem right? Please help me understand. Thank you. 

Thanks for joining this thread and adding a screenshot of the data to be reviewed, @Juanita7.

You're right that the Transaction Journal shows an increasing balance of the A/P account. To help fix this and clear out your vendor's credit, ensure that the transactions are linked to the deposit and bill credits accordingly. 

To begin, record a Deposit of the vendor check:

1. Select the Banking tab and click Make Deposits.
2. Choose OK if the Payments to Deposit window appears. If not, move to the next step.
3. In the Received from the drop-down, select the vendor who gives you the refund 
4. Choose the accurate Accounts Payable account in the From Account field.
5. Input the quantity of the Vendor check in the Amount column.
6. Enter the needed details, then click Save & Close.

Once done, create the bill credit and link this to the deposit. You may utilize and follow the steps on Scenario 1, step 2, and 3 in this article: Record a vendor refund in QuickBooks Desktop.

In addition to that, I've shared this link for ready-made vendor reports you can open at any time to help monitor your business expenses and accounts payable. You can also customize them depending on your business needs. 

Please don't hesitate to leave a comment below if you have other questions about your A/P transactions in QuickBooks. I'll be happy to help you again. Stay safe and take care!