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Senior Explorer *

Credit - Refund - Link together for client who used PayPal to pay

We have issued partial refunds to customers via PayPal and want to make sure we have entered them correctly since they show up as $0 balance on unpaid invoices but not other customers with $0 balance are showing up.

We have followed the following steps so far:
  1. Entered credit memo for customer
  2. Created "refund" for customer drawn on PayPal bank account in the pull down window and shows as from "accounts payable"
Next we go to "Receive Payments" and pull up the customer name with a listing of open transactions. The one we see is the transaction for "refund check" that when selected fills in the amount. Do we simply click "save" at this point?  Nothing is entered at the top of the "receive payments" window for Payment Method or Check No., do we leave that blank? Also, for "deposit to account" should that be the account (PayPal in this case) where we received and refunded the money?
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Best answer 12-10-2018

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Established Community Backer ***

From the QB Mac user guide. Although you have record...

From the QB Mac user guide.

Although you have recorded both the credit memo and the check, you still need to connect the check to the credit memo so that QuickBooks can track the transaction correctly. You use the Receive Payments window to connect the two.

To connect the refund check to the credit memo:

  • 1  Choose Customers > Receive Payments.

  • 2  Choose the customer to whom you just wrote the refund check. You'll see the amount of the credit included in the Existing Credits field and the refund check in the bottom section of the window.

  • 3  Select the Apply Existing Credits checkbox.

  • 4  On the Refund Chk line, enter the check amount in the Payment column, if not already entered by QuickBooks, and then click OK. If you now choose Customers > Create Credit Memos/Refunds to display the credit memo you just entered and click Tx History, you should see the refund check listed in the Transaction History - Credit memo window. 

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14 Comments
Established Community Backer ***

From the QB Mac user guide. Although you have record...

From the QB Mac user guide.

Although you have recorded both the credit memo and the check, you still need to connect the check to the credit memo so that QuickBooks can track the transaction correctly. You use the Receive Payments window to connect the two.

To connect the refund check to the credit memo:

  • 1  Choose Customers > Receive Payments.

  • 2  Choose the customer to whom you just wrote the refund check. You'll see the amount of the credit included in the Existing Credits field and the refund check in the bottom section of the window.

  • 3  Select the Apply Existing Credits checkbox.

  • 4  On the Refund Chk line, enter the check amount in the Payment column, if not already entered by QuickBooks, and then click OK. If you now choose Customers > Create Credit Memos/Refunds to display the credit memo you just entered and click Tx History, you should see the refund check listed in the Transaction History - Credit memo window. 

View solution in original post

Senior Explorer *

Thanks SkinnyRaven. It looks like if we go into the "Rece...

Thanks SkinnyRaven. It looks like if we go into the "Receive Payments" window we do see the refund correctly as you indicate in #4 above.  I think we did it correctly for the original credit and refund and just need to connect the check to the credit.  

I found this page on the website for QB and I think this explains the process fully: <a href="http://support.quickbooks.intuit.com/support/Articles/SLN41034" rel="nofollow" target="_blank">http://support.quickbooks.intuit.com/support/Articles/SLN41034</a>

In the "refund" step on that link it seems QB automatically selects Accounts Receivable from the pull down so you don't have to select it.  Any thoughts on that?

Thanks again!
Established Community Backer ***

Correct, when you use the refund option the account shoul...

Correct, when you use the refund option the account should default to A/R.
Senior Explorer *

Hey Skinny Raven, we had to do a partial refund so we cre...

Hey Skinny Raven, we had to do a partial refund so we created a new Credit Memo then used the Refund option.  When we went to the Receive Payments window and entered the Customer Name there is nothing showing. We now have no way to link the credit and refund. I checked and it was correctly marked as a refund check and the account was Accounts Receivable. Not sure what we did wrong.
Established Community Backer ***

I got nothing other than re-confirming the name on the cr...

I got nothing other than re-confirming the name on the credit memo/refund. This should work even by writing a check without a credit memo as long as you use A/R as the expense account.
Senior Explorer *

Thanks.

Thanks.
Established Community Backer ***

There are not three transactions. The Receive Payments st...

There are not three transactions. The Receive Payments step is only how you access that a refund and a credit memo need to be linked.

In QB PC, we don't have this extra step.
Senior Explorer *

Thanks. The only thing is that in QB Mac if you don't do...

Thanks. The only thing is that in QB Mac if you don't do this extra third step (1. credit memo, 2. refund, 3. receive payments) your open invoices report will always show the refund amount as open in the report.
Established Community Backer ***

"so we created a new Credit Memo then used the Refund opt...

"so we created a new Credit Memo then used the Refund option. "

That means the transactions are already linked. You don't need to do any further processing.
Senior Explorer *

I hope you are right, but considering we've had to "recei...

I hope you are right, but considering we've had to "receive payment" for every refund previously I think we must have missed something.
Established Community Backer ***

Step 1 is correct. Step 2 makes no sense. This is not AP...

Step 1 is correct.

Step 2 makes no sense. This is not AP. Let QB issue the refund check from the CM, directly. Don't do this step manually.

There is nothing to do for Step 3, if you issued a refund check from the credit memo. You are confusing issuing a credit that applies to clear an unpaid invoice, with a credit that refunds the customer. One credit cannot meet both uses. So, I don't understand step 3. Sorry.
Senior Explorer *

Hi QBTEACHMT are you referencing step 2 and step 3 in the...

Hi QBTEACHMT are you referencing step 2 and step 3 in the original question or in SkinnyRaven's answer?

We enter a credit memo in QB then do the refund by clicking the "refund" button on the credit window as you mentioned. However, if you stop at this point QB doesn't seem to connect the credit and refund so they continue to show up in reports for open balances even though the balance is $0, whereas customers with a $0 balance and no refund correctly do not show up in reports.
Established Community Backer ***

I was trying to follow the initial steps. "In the "refun...

I was trying to follow the initial steps.

"In the "refund" step on that link it seems QB automatically selects Accounts Receivable from the pull down so you don't have to select it."

That is correct. By definition, the CM creates an AR credit. You either use it for an invoice amount, or issue it as a refund. That means it clears the AR credit.
Senior Explorer *

Got it, then QB needs you to "link" the Credit and Refund...

Got it, then QB needs you to "link" the Credit and Refund by doing the "receive payments" function which means there are three transactions with every refund!

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