How can I record a customer credit memo that does not restock the item?

thomastonmilk · ‎February 13, 2022

We sell milk to schools and stores. Most all customer returns cannot be resold. Every customer credit memo returns the item to inventory and adds the COGS back to our customer sales on reports which throws off our total sales and profit and loss. How can I create a credit memo in Quickbooks Desktop Accountant 2019 that does not restock the item or return it to inventory? Your help is appreciated.

Rainflurry · ‎February 14, 2022

@thomastonmilk

Using a credit memo should work fine. Just set up a non-inventory item called "Milk Returns" or "Spoilage" or something similar and assign that item to whatever expense account you use for the returns. Then, issue the credit memo. That will add the credit to the customer's account (by reducing A/R) and book the expense while having no effect on inventory.

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SarahannC · ‎February 14, 2022

Hello there, @thomastonmilk.

When creating a credit memo in QuickBooks, it affects your items. QuickBooks will record them in your Profit and Loss report and Sales report.

With that, in QuickBooks, there's no direct way to create a credit memo that will not restock the item.

You can create journal entries to keep things you want. Still, you can consult other accountants for further assistance and ensure you'll be using appropriate accounts in the process. They might also share with you another way on how to handle them accordingly.

Here's how:

Go to the Company menu.
Select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits.
Select Save or Save & Close.

You'll want to check this article for more details and tips: Learn how to record journal entries in QuickBooks Desktop.

If you notice a discrepancy between the Profit & Loss and a Sales reports, you can visit this article to learn more on how you can troubleshoot them: Profit and Loss report does not match a sales report.

Visit again if you have further concerns. I'm always here whenever you need help. Stay safe, thomastonmilk.

thomastonmilk · ‎February 14, 2022

Thank you for your response but this solution will not work for me. We have over $16,000 in daily sales with multiple items returned almost daily. It would take me forever to do journal entries for each item on a credit memo. I feel Quickbooks should have made adjustments in this software for that situation. I'm sure I'm not the only wholesale or retail business that sells consumable products that cannot be returned to stock. I'm using 2019 Desktop, hopefully they have remedied this in 2022.

Rainflurry · ‎February 14, 2022

@thomastonmilk

Using a credit memo should work fine. Just set up a non-inventory item called "Milk Returns" or "Spoilage" or something similar and assign that item to whatever expense account you use for the returns. Then, issue the credit memo. That will add the credit to the customer's account (by reducing A/R) and book the expense while having no effect on inventory.

BigRedConsulting · ‎February 17, 2022

@SarahannC

RE: With that, in QuickBooks, there's no direct way to create a credit memo that will not restock the item.

Of course there is, which @Rainflurry came up with - it seems without any effort whatsoever.

thomastonmilk · ‎February 18, 2022

I'm not sure I agree with "without an effort" because I tried it and creating an non-inventory item "returns or spoilage" did not work for me plus we have over 1000 items. Other suggestions are welcomed.

@BigRedConsulting wrote:
@SarahannC
RE: With that, in QuickBooks, there's no direct way to create a credit memo that will not restock the item.

Of course there is, which @Rainflurry came up with - it seems without any effort whatsoever.

Rainflurry · ‎February 18, 2022

@thomastonmilk

What didn't work about it? When I set it up and issued a credit memo, it booked an expense (as opposed to restocking the item) and corresponding customer credit. Isn't that what you're trying to accomplish?

AlcaeusF · ‎February 27, 2022

Hello Rainflurry,

I have reviewed the solution you’ve shared and it's correct and accurate. Thank you for sharing your inputs to help address the issue.

We love to see members supporting one another! Have a great day.

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How can I record a customer credit memo that does not restock the item?