Refund sent to customer for Overpayment but check issued from accounts payable

Let's get this figured out for you, W012.

First off, please note that unapplied payment income may show up if a customer made a prepayment before you created the sales form or if you've entered payments without linking them to sales forms. To fix this, open the refund check and ensure it’s classified under Accounts Receivable. Then, use the Receive Payments function to link the transaction to the unapplied payments.

Here's how:

1. Go to the Lists menu.
2. Choose Chart of Accounts.
3. Select the appropriate register and open the refund check.
4. Select Accounts Receivable from the Accounts column in the Expenses tab.
5. Pick a customer's name in the Customer: Job column.
6. Hit Save & Close.
   
   

If done, you can now link the unapplied payment. Here's how:

1. Navigate to Customers and tap Receive payments.
2. Pick the customer in the Received from.
3. Then check the unapplied payment and tick Apply Credits.

Here's an article for detailed information: Void or refund customer payments in QuickBooks Desktop.

Moreover, visit this article for future reference: Take and process payments in QuickBooks Desktop.

We're always here to help if you have other concerns or questions

Thank you, GenmarieM.  However something here is not tracking; when I go into the bank register and open the check that was sent last year, there is no "Expenses" tab or "Items" tab; I'm attaching a screenshot; please take a look at it if you will.

There is truly no invoice for the funds received and deposited to our bank account; later a check was made for the same amount deposited, so the deposit and check offset each other; so our bank records have already been reconciled; so....just thinking.... is there any reason can I just delete the unapplied "payment"?

But when I look at the bank deposit record, I see "from account" for the deposit is "undeposited funds"; so I'm concerned that deleting the transaction from the "receive payments" screen will mess up the bank deposit; am I overthinking this? Or will deleting the payment indeed throw something else off in our books?

Hi there, W012. To resolve the unapplied payment, we can create a journal entry. Let me walk you through the process below.

This will move the payment from Accounts Payable to Accounts Receivable.

Here's how:

1. Go to Company. Then, select Make General Journal Entries.
2. Create a journal entry to debit Accounts Receivable and credit Accounts Payable for the overpayment amount.
3. Enter the date of the original transaction.
4. Debit Accounts Receivable for the customer and mention the customer's name.
5. Credit Accounts Payable for the same amount and note the customer’s name.

Then, apply the Journal entry to the unapplied payment.

1. Link the journal entry to the unapplied payment.
2. Go to Customer Center.
3. Select the customer and find the unapplied payment and the newly created journal entry.
4. Apply the journal entry to the unapplied payment to clear it.

Refer to this article for creating checks in QBDT.

Additionally, you can void the refund you've processed to your customers if there are any issues when processing it. Refer to this article.

Let me know if you have further concerns about managing your customer transactions. I'm here to help.

@W012 

QB employees are creating more work for you because it's pretty clear they don't understand your situation.

Your question is a bit confusing.  Your screenshot shows that check #1379 paid bill # Refund-ID 30099891, so that should have closed the A/P created by the bill.  Are you saying this bill payment is still showing as an open vendor credit (unapplied payment)?  Are you importing these transactions from another software platform?    

Pull up the bill payment again and click on the Reports tab at the top, then click 'Transaction History'.  You should see the bill listed under 'Bills Paid'.  Do you see the bill?  If so, click on the blue 'Go To' button. That's the bill that was paid.  If there's a bill listed for the same amount as the payment, then it's confusing as to why this payment is showing as unapplied.  

@W012 

Also, do you still have open A/R for this customer for their overpayment?  

Ah! It's getting clearer now - still not totally, but I think I'm beginning to understand...

Instead of opening the check from the bank register, I needed to open the "Bill" from the Vendor List or from the history report as per your instructions; now I have the "Expense" tab and "Items" tab. Unfortunately I see that "Marketing" is the expense account that was selected when the check was issued.

Regarding your question about an open vendor credit -- No, it is the collections report showing an AR credit on the customer account. 

@W012 

Is the unapplied payment you’re referring to your customer’s overpayment (showing in A/R reports) or your refund payment (showing in A/P reports)?

The unapplied payment I'm referring to is our customer’s overpayment (showing in A/R reports).

I have been scratching my head on this problem, and even asked google's gemini ai for solutions; it gave a l-o-n-g solution, that I hope is not necessary, but it did provoke some additional thoughts for me, since the received payment increases "income"....

I think I have a simple, clean solution; but I would really appreciate some feedback to make sure I'm not overlooking something.  Will this work: 

1. create a new item named "AR Payment Adjustment" (type = service) linked to existing contra-income account, "Sales Returns & Allowances".

2. create an invoice to this customer for this item "AR Payment Adjustment"

3. Apply the erroneous payment to this new invoice

Any problem with this method?  

Thank you All  for your help! And I especially thank you, Rainflurry, for continuing to reply to my questions!

I'm glad to see you received the answers you were looking for here in the Community, W012. You know where to come if you ever need a hand again in the future. Take care!