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SophyYang
Level 2

How to apply payment to a customer refund cheque which has been reconciled ?

Hi, I need advice on this issue:

I discovered there is one customer refund transaction back in 2017. Refund cheque had been issued and reconciled but there was no invoice transaction was recorded. the customer account still showed the outstanding amount the cheque was written. 

I created invoice transaction, but how can I link the payment to the invoice?

thank you in advance for your help

Sophy

Solved
Best answer October 06, 2020

Best Answers
CharleneMaeF
QuickBooks Team

How to apply payment to a customer refund cheque which has been reconciled ?

There are two ways to remove the amounts, SophyYang.

 

We can either create a Journal entry to write off the amount or apply discounts to remove small amounts. I recommend consulting an accountant before performing any of these options.

 

You may follow these steps to create a journal entry:

  1. From the Company menu, select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.
  3. Select the Account field and select Accounts Receivable from the dropdown list.
  4. Enter the amount under the Debit column, tab to the Name column, and select a Customer Name from the dropdown list.
  5. In the next line, select the offset account and enter the amount under the Credit column. The offset account is usually an Expense account.

 

If we use discounts, we'll have to create a Charge off Account and Charge-off item to use when writing off small amounts.

 

Create a Charge off Account:

  1. From the Lists menu, choose Chart of Accounts.
  2. Select the Account button and choose New.
  3. Select Income, then Continue.
  4. Enter Minor A/R and A/P Charge-Off in the Account Name field and select Save & Close.

Create a Charge-off item:

  1. From the Lists menu, choose Item Lists.
  2. Select the Item button and choose New.
  3. Choose Other Charge as Item Type and select Continue.
  4. Enter Minor Charge-Off in the Item Name/Number field.
  5. Select Non-Taxable Sales in the Tax Code field.
  6. Select Minor A/R and A/P Charge-Off in the Account field.
  7. Select OK to save and create the item.

 

Then, you may follow these steps to apply the discount:

  1. From the Customers menu, choose Create Invoices.
  2. Select the customer name in the Customer: Job field.
  3. Select Minor Charge-Off in the Item field and enter the amount of overpayment.
  4. Select Apply Credits.
  5. Select the credit in the Available Credits section (The amount of credit should match the amount of invoice).
  6. Select Done to close the Apply Credits window.
  7. Select Save & Close.

 

To learn more about adding a refund to your customers, you can check out this article:  Record A Refund In QuickBooks Desktop

 

Additionally, you can run the Customer Balance Summary report in QuickBooks Desktop. This will show you your company's current balance with each customer. Just go to Reports and select Customers & ReceivablesCustomers &. Then, choose Customer Balance Summary.

 

You can count on me if you have more questions about managing customers' transactions in QuickBooks.

View solution in original post

4 Comments 4
JonpriL
Moderator

How to apply payment to a customer refund cheque which has been reconciled ?

Hello @SophyYang,

 

A reconciled check cannot be applied as a payment to the newly-created invoice. I'd recommend contacting your accountant for guidance in clearing out your customer's balance. He/she might create a journal entry to clear it out.

 

Since you created a new invoice, we can create a payment to close it. Let me show you how.

  1. Open the said invoice.
  2. Select Receive Payments.
  3. Enter the amount of payment.
  4. Click Save & Close.

Additionally, here's an article you can read to learn more about how you can record a payment: Receive and process payments in QuickBooks Desktop.

 

Also, consider checking and reading through the steps in the article for ideas about the different ways you can track a customer transaction: Accounts Receivable Workflow in QuickBooks Desktop.

 

You can always leave a comment below or post a question a new thread if you have any other questions. Stay safe!

SophyYang
Level 2

How to apply payment to a customer refund cheque which has been reconciled ?

Thank you for your reply.

Journal Entry can be done.  But how can I get rid of the outstanding balance on the customer prfile.

 

Sophy

CharleneMaeF
QuickBooks Team

How to apply payment to a customer refund cheque which has been reconciled ?

There are two ways to remove the amounts, SophyYang.

 

We can either create a Journal entry to write off the amount or apply discounts to remove small amounts. I recommend consulting an accountant before performing any of these options.

 

You may follow these steps to create a journal entry:

  1. From the Company menu, select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.
  3. Select the Account field and select Accounts Receivable from the dropdown list.
  4. Enter the amount under the Debit column, tab to the Name column, and select a Customer Name from the dropdown list.
  5. In the next line, select the offset account and enter the amount under the Credit column. The offset account is usually an Expense account.

 

If we use discounts, we'll have to create a Charge off Account and Charge-off item to use when writing off small amounts.

 

Create a Charge off Account:

  1. From the Lists menu, choose Chart of Accounts.
  2. Select the Account button and choose New.
  3. Select Income, then Continue.
  4. Enter Minor A/R and A/P Charge-Off in the Account Name field and select Save & Close.

Create a Charge-off item:

  1. From the Lists menu, choose Item Lists.
  2. Select the Item button and choose New.
  3. Choose Other Charge as Item Type and select Continue.
  4. Enter Minor Charge-Off in the Item Name/Number field.
  5. Select Non-Taxable Sales in the Tax Code field.
  6. Select Minor A/R and A/P Charge-Off in the Account field.
  7. Select OK to save and create the item.

 

Then, you may follow these steps to apply the discount:

  1. From the Customers menu, choose Create Invoices.
  2. Select the customer name in the Customer: Job field.
  3. Select Minor Charge-Off in the Item field and enter the amount of overpayment.
  4. Select Apply Credits.
  5. Select the credit in the Available Credits section (The amount of credit should match the amount of invoice).
  6. Select Done to close the Apply Credits window.
  7. Select Save & Close.

 

To learn more about adding a refund to your customers, you can check out this article:  Record A Refund In QuickBooks Desktop

 

Additionally, you can run the Customer Balance Summary report in QuickBooks Desktop. This will show you your company's current balance with each customer. Just go to Reports and select Customers & ReceivablesCustomers &. Then, choose Customer Balance Summary.

 

You can count on me if you have more questions about managing customers' transactions in QuickBooks.

SophyYang
Level 2

How to apply payment to a customer refund cheque which has been reconciled ?

Thank you. Creating a JE has done the Job.

Sophy

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