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marketingmuses
Level 2

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

We have a client that was invoiced and the client paid the deposit amount. A few weeks later, the client decided to cancel the service and we issued a check in the amount of the refund. 

 

We then did the following steps: 

  • Select +New
  • Under customers, select 'credit memo'
  • Selected the name of the customer on the invoice
  • Enter the entire amount of the invoice, including the deposit
  • Clicked save & close
  • Check was already created 
  • Then recorded the credit memo payment:
  • click +New
  • Under customers, select 'receive payment'
  • selected the name of the client on the invoice
  • entered the credit memo amount, 
  • click save and close

This did not work. Essentially, the initial deposit is still showing in the account. The Credit Memo shows as 'unapplied' and now the balance is in the negative. See screenshots.

 

Can someone please help me figure out what the issue is here or where we might have missed a step in the process? 

 

If anyone on QB Online can help with this, I'd appreciate it. In the past, this was a simple thing to process. Thanks!

 

Screenshots: Screen Shot 2020-06-04 at 4.17.14 PM.png

Screen Shot 2020-06-04 at 12.19.48 PM.png Screen Shot 2020-06-04 at 11.43.52 AM.png

 

 

 

 

 

 

 

 

Solved
Best answer June 05, 2020

Best Answers
KlentB
QuickBooks Team

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hi there, marketingmuses.

 

I'll help you in handling your customer balance.

 

The program prompts you that warning because you've entered the whole amount of the invoice in the credit memo. Please know that we only need to create a credit memo for the remaining balance of the invoice since you've already issued a refund for the initial deposit.

 

We can open the credit memo and edit the amount. This way, we'll be able to close the invoice and zero out the customer's balance. Here's how to do it:

 

  1. Select Sales from the sidebar menu.
  2. Go to the Customers tab, then select the appropriate customer.
  3. Locate then click the credit memo.
  4. Edit the amount of the credit memo.
  5. Click Save and close, then select Yes to confirm the changes.

Once done, you can now perform Receive payment using the credit memo that you've created.

 

In case you'll need to track all the invoices that are due on a particular day, we can customize your Transaction Detail By Account report.

 

Should you have any other concerns or follow-up questions, you can always find me here. Have a great rest of the weekend.

View solution in original post

8 Comments
JenoP
QuickBooks Team

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hi there, marketingmuses. 
 

Credit memo is usually created if you want to use a credit as a payment to a future invoice.

 

As you mentioned and shown in the screenshot, the initial deposit is still recorded in your account. This can be the reason why there's a negative balance in the customer's account.

 

If you want to keep the original payment in the record, you can directly create a refund receipt or check to refund the customer instead. Otherwise, applying the credit memo as a payment to the original invoice will still leave a negative balance. 

 

I also checked the screenshots and it looks like the Credit Memo was not applied successfully as a payment to the original invoice. Let's open the invoice again and redo the process:

 

  1. Click the 1 payment made link under the PAID status.
  2. Click the date of the payment.
  3. Make sure to check the box of the unapplied Credit memo in the Credits section.
  4. Click Save and close.

Let me share these articles for more details on how to record a refund or apply a credit memo: 

 

I'll be around if you nee anything else. 

marketingmuses
Level 2

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hi Jeno - 

 

Thanks for the quick reply! 

 

One of the issues is that the original invoice balance due was much higher than the deposit amount that was refunded. We did create a refund check, but the outstanding balance was still there from the original invoice balance due. So it wasn't the same amount refunded compared to the original invoice - hopefully this makes sense.

 

In the morning we will go through all of these steps that you are recommending and I will follow up if that solved the problem. 

 

Thanks!

marketingmuses
Level 2

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hi Jeno - 

 

Thanks for the quick reply! 

 

One of the issues is that the original invoice balance due was much higher than the deposit amount that was refunded. We did create a refund check, but the outstanding balance was still there from the original invoice balance due. So it wasn't the same amount refunded compared to the original invoice - hopefully this makes sense.

 

In the morning we will go through all of these steps that you are recommending and I will follow up if that solved the problem. 

 

Thanks!

AlexV
QuickBooks Team

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Good day, marketingmuses.

 

Thanks for getting back to us.

 

In addition to what my colleague mentioned, you can also create a Credit Memo. Then, create a Check and select Account Receivable as the source account. Once done, we can link them together via Receive Payment

 

We'll be right here if you need anything else. Have a great day!

marketingmuses
Level 2

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hello QB Team - 

 

We followed these instructions step by step and when we arrived at the step:

+ New, Under customers, select 'receive payment’
We received an error message. 
Here is the screenshot of the error message received when trying to apply the payment however there is an invoice in this client's record as you can see from the other screenshots:
Screen Shot 2020-06-05 at 8.46.02 AM.png
 
KlentB
QuickBooks Team

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hi there, marketingmuses.

 

I'll help you in handling your customer balance.

 

The program prompts you that warning because you've entered the whole amount of the invoice in the credit memo. Please know that we only need to create a credit memo for the remaining balance of the invoice since you've already issued a refund for the initial deposit.

 

We can open the credit memo and edit the amount. This way, we'll be able to close the invoice and zero out the customer's balance. Here's how to do it:

 

  1. Select Sales from the sidebar menu.
  2. Go to the Customers tab, then select the appropriate customer.
  3. Locate then click the credit memo.
  4. Edit the amount of the credit memo.
  5. Click Save and close, then select Yes to confirm the changes.

Once done, you can now perform Receive payment using the credit memo that you've created.

 

In case you'll need to track all the invoices that are due on a particular day, we can customize your Transaction Detail By Account report.

 

Should you have any other concerns or follow-up questions, you can always find me here. Have a great rest of the weekend.

View solution in original post

MandRGamez
Level 1

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Hello KlentB.

I have a similar situation and am using QuickBooks 2019 for Mac.  

 

I created an invoice for a client for a booking fee.  The client paid the invoice but then, a couple weeks later, they needed to cancel and we agreed to issue a refund.  

 

I created a Credit Memo for the full amount of the paid invoice, but now I have a an accounts receiveable outstanding amount showing for the original invoiced amount; which shows as paid within invoices.  

 

Wondering if I should not have utilized the credit memo here and instead processed this differently?

 

The client is not moving forward so need to clear out the account receive amount so it is not showing in my chart of accounts or as an outstanding amount owed by the client 

MichelleBh
QuickBooks Team

Question on correctly applying a refund using credit memos - credit memo showing 'unapplied' status

Thank you for bringing this to our attention so that we can deal with this quickly, @MandRGamez.

 

I appreciate you for providing the detailed concern and the effort you've done in applying for the refund. Let me share with you the correct way of recording a refund on QuickBooks Desktop. 

 

Creating a Credit Memo for the refund is the most reliable path. After creating that, you'll need to create a refund check to complete the process. Let me guide you how:

 

  1. Go to Customers, then select Create Credit Memos/Refunds.
  2. Open the credit memo you want to use for the refund. 
  3. Click Refund at the top of the window.
  4. Leave Accounts Receivable as of the account in the detail area of the refund check. This ensures that QuickBooks will account for the credit and refund correctly.
  5. Tap OK

 

Let's now link the credit memo to the check to avoid getting open credit memos and unapplied refund checks.

 

Here's how:

 

  1. Go to the Customer menu, then select Receive Payments.
  2. From the Received from the drop-down, choose the Customer.
  3. Click Discounts And Credits.
  4. In the Available Credits section, mark the check you created, then click Done.
  5. Tap Save & Close.  

 

 I've got this article for your QuickBooks Desktop version: Record a credit memo or refund in QuickBooks Desktop for Mac.

 

Also, you can run the Transaction List by Customer Report to track all the transactions you've entered into the system. Then customize it to show precise data. See the sample screenshot below. 

 

 

Feel free to visit our QuickBooks for Mac 2020 USer's Guide for your later reference. 

 

Please mentioned my name in the comment section if you have follow-up questions about refunds. I'm glad to help you anytime. Keep safe. 

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