Customer overpayment refund but the check was written to the owner not the business, how to link that payment

Hello there, Mai. Since the refund check was issued to the wrong customer, I recommend creating a Journal entry to transfer the refund.

Before doing that, let's delete the incorrect check that was previously created. If the correct customer is not yet in QuickBooks, please create their profile first.

If the customer already exists, you can proceed to create the journal entry by following these steps:

1. Navigate to +Create, choose Journal entry.
2. On the first line: Account: Accounts Receivable (A/R). Debits: refund amount. Customer: the one the payment was originally applied to (the owner).
3. On the second line: Account: Accounts Receivable (A/R). Credits: same amount. Customer: the correct customer/business.
4. In the Memo field, note the reason for the journal entry.
5. Click Save and close.

Once you have created the journal entry, you can then create a check for the correct customer and link the refund overpayment to the customer when receiving the payment.

For detailed instructions, you can refer to the article titled "Record a refund for an overpayment or credit in QuickBooks Online."

Feel free to return whenever you need assistance.

It wasn’t a wrong entry, the check was really made to an individual instead of the business, but I’m supposed to apply it as a refund for the overpayment. How should I record that?

Thanks for clarifying, Mai. You can edit the original Check you created and apply the refund to Accounts Receivable (A/R) while keeping the owner as the Payee, as long as the correct customer is selected in the CUSTOMER/PROJECT field so it links to the overpayment.

If the right customer isn’t set up yet, create them first before continuing with the steps below:

1. Open the Check you created for the refund (the one made to the owner).
2. Select the owner in the Payee dropdown.
3. In the CATEGORY dropdown, choose Accounts Receivable (A/R).
   
4. Choose the correct customer from the CUSTOMER/PROJECT field to link the refund to their overpayment.
5. Once done, click Save and close.

Next, go to +Create → Receive payment, select the same Customer, then select both the overpayment/credit and the refund check so they offset each other, and the total applied is zero, then Record and close.

This will properly clear both the refund and the overpayment from your records.

If you have other concerns, feel free to add a reply below.

Hello Mai,

I just wanted to follow up to check if the resolution we provided helped resolve your issue. Please let us know if everything is now working as expected or if you’re still experiencing any problems.
 
We’ll be glad to assist further if needed.