QB Desktop Refund Credit Balance from Petty cash

Good evening and thank you for coming to the Community with your concerns! @straighttalk. I'm happy to show you how you can clear the outstanding balance and refund your customer at the same time.

There are three ways to record a refund in QuickBooks Desktop, you can either create a check, credit memo to carry on the next invoice, or through a journal entry. Now, let's go ahead and create a Check transaction. Please note to post the Accounts Receivable in the Expenses tab. Here are the detailed steps you can follow:

1. Go to the Banking menu and select Write Checks.
2. In the Bank Account field, choose Petty cash.
3. Enter the customer's name in the Pay to the order of box.
4. Select the Expenses tab and enter Accounts Receivable in the Account column.
5. Input the amount and other details you'd like to include.
6. Select Save and Close. This is how the check would look like:

Once done, post this to the credit to clear the negative balance for Accounts receivable of your customer. I've also included an article that will further guide you on how to create a credit for your customer: Give your customer a credit or refund in QuickBooks Desktop for Windows. If you want to create a Journal Entry, I suggest speaking with your accountant to ensure that the data is accurate.

Moreover, I've included a snapshot on creating a credit memo: 

In addition, you can check out these articles that may help you with your future transactionsm such as the accounts receivable workflows and personalizing your sales forms in QuickBooks Desktop:

• Get started with customer transaction workflows in QuickBooks Desktop.
• Use and customize form templates.

If you need further assistance with the process or any other questions, please feel free to reply to this post. I'm eager to help you in any way I can. Enjoy the rest of your day!

By accounting norms Petty Cash is not a bank account, it is a current asset account. Therefore, petty cash is not an option in the "write checks" dropdown. For the same reason, it is also not an option when you go from the receive payments window to try to refund an overpayment balance. That window only shows accounts designated as bank accts. It should let you draw down cash from Petty Cash, but it does not. It insists you book all refunds designated as "cash" to either a checking or savings account. This creates transactions in those accts. which actually don't happen if you pay from Petty Cash. So, in order to reverse that, you need to make a dummy transfer from Petty Cash to the debited bank acct. and then manually clear those offsetting transactions, which never actually occured. This makes no sense to me, especially when making a deposit, the dropdown does (as it should) give Petty Cash as one of the account options. I have searched several times over many months for a correct answer to this question and have found none. Before EOY close I'd like to get this right and not have to use the work-around and without having to incorrectly designate the Petty Cash (current asset) acct. as a bank acct.. So, dpes anyone have a correct answer. Note I am using Qbks. DESKTOP. Thanks.

Hi there, straighttalk.

I appreciate you for coming back to the thread to add further details about your concern. With this, I'll ensure to share additional information on how customer transactions work in QuickBooks. Then, provide an alternative way on how to achieve your goal.

Yes, you're correct! The petty cash account isn't a bank account rather a current asset. The details shared above about creating a check and credit memo to carry on the next invoice are the only option to refund the customer so your account stays accurate.

Since you're using the Petty Cash account to clear the outstanding negative balance from the customer's account, I suggest creating a Journal entry. This way, you're able to transfer the amount for a refund from one account to another. To ensure your records are in shipshape, I suggest consulting an accountant before performing the process. They can provide suggestions on how to properly handle the account, especially with the category to use for the debit and credit.

For further details on different ways on how you can track customer transactions in QuickBooks Desktop, you can click this article: Get started with customer transaction workflows in QuickBooks Desktop.

Lastly, you may refer to this article on how QuickBooks Desktop provides different reports to display data from your company file so you'll be able to see your sales transactions: Understand reports.

 Please let me know if you have further questions about managing sales or customer entries in QBDT. I'm always glad to answer them. Have a nice day.

You have to set up petty cash as a bank account if you want it to be an option when you "write checks".  Yes, technically it's a current asset but that's not how QB Desktop works.  You just have to roll with it.  If you're concerned about classifying petty cash as an asset, you can do that and use journal entries to adjust. Otherwise, set it up as a bank account and be done with it.  You can always do a journal entry when closing a period to have your balance sheet properly classify petty cash an other current asset.

 Your first response assumed that Petty Cash was a bank account. That is an inaccurate assumption. Sure, I can make a journal entry to move money from one account to another, but I shouldn't have to in this instance. Also, there seems to be no way in Qbks. to associate the journal entry with the outstanding negative customer balance. So, if I do that, it doesn't clear the balance on the customer's acct.

Are you really a Qbks. employee? Qbks. has been the primere accounting software for small businesses for decades. Honestly, I expect much better answers form an employee of Qbks.

Not how Qbks. desktop works? That's laughable...premire small business accounting software thst doesn't follow accounting norms. Even Qbks. will tell you that Petty Cash is a current asset account. I won't be "rolling" with it as a bank account.

In response to your "response" I don't need to consult an accountant on how to make the journal entry. The journal entry would beto credit Petty Cash (because it is an asset acct., not a bank acct.) and Debit Accounts Receivable for the amount of the positive balance on the customer's acct. You would also need to use the Customer's name in the "name" section on the journal entry. 

I still think qbks should let you do a direct customer refund from petty cash while correctly treating petty cash as an asset acct., but it doesn't, so the journal entry described here is the best way to handle this.