Accounting for Refurbished Units

jenuneekor · ‎May 13, 2020

Hi! Our company has seven units of our product that have been returned to be repaired (and we sent each of the customers a new product).

1) The inventory of the new product has already decreased when I created the initial invoice

2) I created a new "product" in "Products & Services" in QBO for the refurbished units

3) I created an invoice to the customer for a $0 fee for the new unit being sent to them.

4) When we receive their return, I need to account for that returned unit going into the refurbished product inventory. Would it work if I create a $0 refund receipt and make the item the refurbished product? Or is there a way that would make more sense?

Thank you so much for your help!

Jen

Rasa-LilaM · ‎May 13, 2020

Thanks for being detailed about your concern, jenuneekor.

Yes, you’re correct. You’ll have to create an invoice for the new product sent to the customer. Then, enter a credit memo with a zero value for the refurbished units.

This can help write off an outstanding receivable balance. I still suggest following the resolution provided by @MaryLurleenM how to enter a credit memo.

For the invoice, let me show the steps.

Tap the New menu at the top to select Invoice under Customers.
Type in the client’s name in the Customer field and transaction’s date in the Invoice Date field.
Enter the correct date in the Service Date column and then choose the refurbished item in the Product Service field.
Fill in the remaining field boxes and enter zero in the QTY column.
Click Save and close.

Also, you mentioned about sending two units. To clarify, are you referring to recording two items on the credit memo or the number of products sent out for replacement. Any details shared can help me provide the best solution.

For future reference, let me share this link containing a breakdown of articles of the processes you can perform in QBO. Choose the topic you want to view and then click on the link to see the complete details: Get Started.

Reach out to me if you have any other concerns or questions. I’m here to answer them for you. Have a good one.

View solution in original post

MaryLurleenM · ‎May 13, 2020

Hello there, jenuneekor,

That's right, since the item has been sent out, it will reduce the inventory item. Then, increases the refurbished item created. This is where you added the items returned.

You don't have to create an invoice and refund receipt to offset the previous invoice and payment received.

You'll want to create a credit memo instead. It's a memorandum issued to reduce the amount that the buyer owes from an earlier invoice. Or in your case, when the buyer returned the goods. You'll want to record the credit memo as a reduction of accounts receivable (A/R) balance.

Here's how:

Click + New on the left pane.
Select Credit memo.
Fill out all required fields (including the customer name, date, products/service items, quantities, and amounts).
Select Save and close.

Check out this article for more information: Enter and apply credit memos and delayed credits in QuickBooks Online.

Stay in touch with me if you have additional questions.

jenuneekor · ‎May 13, 2020

Hi MaryLurleenM,

Thank you so much for your quick response!

Could you please confirm if I'm understanding these steps correctly? The original purchase invoice was complete, sent, and paid. I'm trying to figure out how to do the following:

1) Decrease inventory of -1 new product (the replacement product we send), at zero charge

2) Increase inventory of +1 refurbished product (the original product that is returned to us).

It sounds like I need to:

1) Create a $0 invoice for 1 unit of the new product to account for one new unit being sent out for inventory

2) Create a $0 credit memo for 1 refurbished unit to increase inventory of refurbished units by one

Does that cover everything I need to do for the transaction? I don't believe this impacts our accounting in any other ways... So in the end I will have sent two new units to our client and received one refurbished unit back.

Thank you in advance for your help!

Jen

Rasa-LilaM · ‎May 13, 2020

Thanks for being detailed about your concern, jenuneekor.

Yes, you’re correct. You’ll have to create an invoice for the new product sent to the customer. Then, enter a credit memo with a zero value for the refurbished units.

This can help write off an outstanding receivable balance. I still suggest following the resolution provided by @MaryLurleenM how to enter a credit memo.

For the invoice, let me show the steps.

Tap the New menu at the top to select Invoice under Customers.
Type in the client’s name in the Customer field and transaction’s date in the Invoice Date field.
Enter the correct date in the Service Date column and then choose the refurbished item in the Product Service field.
Fill in the remaining field boxes and enter zero in the QTY column.
Click Save and close.

Also, you mentioned about sending two units. To clarify, are you referring to recording two items on the credit memo or the number of products sent out for replacement. Any details shared can help me provide the best solution.

For future reference, let me share this link containing a breakdown of articles of the processes you can perform in QBO. Choose the topic you want to view and then click on the link to see the complete details: Get Started.

Reach out to me if you have any other concerns or questions. I’m here to answer them for you. Have a good one.

jenuneekor · ‎May 14, 2020

Thank you both so much for all of your help! This completely makes sense and I'm good to go. I appreciate your time!

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Accounting for Refurbished Units