Credit Memo Application to Account

Thanks for laying in complete details regarding your concern, WaterWorks243. I can share information about the credit memo in QuickBooks Online and provide alternatives so the data will reflect on your A/R.

You're right. We can only apply a credit memo to an invoice in QBO. Furthermore, we can't directly select a specific account to assign to the credit memo.  

To account for the transactions, you can utilize the Journal entry (JE) to correct the balance by adding the A/R to debit/credit an amount. In doing so, it will reflect on your A/R entries. In this procedure, I recommend consulting an accountant so a professional can suggest how to record the data in JE accurately.

If you don't have an accounting expert to help you, you can look for one from this link: Find a ProAdvisor. Then, add them as an accountant user in your QuickBooks company. 

After finding and adding the accountant, you can review this link to guide you in generating a JE for the transaction: Create journal entries in QuickBooks Online.

I've also included this blog to help you better understand and handle your A/R in QuickBooks: What is accounts receivable? How to manage in 2024.

If you have more concerns with your A/R data and other QBO transactions, just hit the Reply button. I'll be in all hands to provide needed assistance.

@WaterWorks243 

QB Desktop allowed you to set up multiple A/R accounts and to choose between those A/R accounts on invoices and credit memos.  QB Online only has one default A/R account that can be used on invoices and credit memos, but functionally they are essentially the same.  Your comment of "QB online when I try to apply the credit memo I can only do it to an invoice and then it does not apply to the line item I am trying to balance." is confusing.  In Desktop you still have to apply the credit memo to an entire invoice, not a specific line item on an invoice.  Why can't you just use the default A/R account in Online and track the levy abatements with memos instead?  

I realized after the initial post that I cannot designate an invoice to a specific sub-account either.  These are huge issues for what I use this software for.

I need to track the "sub-accounts" separately as they are all different Levy Years.

For example: 

Account 1100 - Town Real Estate                 = 3,000.00

       Account 1123 - Town Real Estate 2023 = 1.000.00

       Account 1124 - Town Real Estate 2024 = 2,000.00

The desktop version allowed me to add either an invoice or a credit memo specifically to the sub-accounts.  Obviously, the main account would adjust as well.  However, I need to be able to reconcile my numbers with the town and make sure that we have the same outstanding receivables for EVERY Levy year.  Unfortunately, people tend to not pay their taxes when they are supposed to and we end up balancing many years.

These are not goods or services - these are funds being collected on our behalf.  When funds become no longer collectable (abatement) I need to enter a credit memo.  No money will ever be exchanged in this case, but I need it to be out of my receivables as it no longer is a receivable.

The screenshots below show the ability in QB online

@WaterWorks243 

QB Online doesn't have the ability to create A/R sub-accounts so you will need to find a new way to track this if you continue with QB Online.  This is a common complaint with QB Online because A/R sub-accounts were a very useful feature in Desktop.  I would suggest creating tags that match your A/R sub-accounts from Desktop, i.e. "1101B-01 Real Estate - Bourne" and assign the appropriate tag to each invoice and credit memo.  You can run a Transaction List by Tag Group report and filter by invoice and credit memo to see the outstanding balance similar to your A/R sub-accounts.  Not sure if that would work for your but that's the best suggestion I can think of. 

Thank you Rain!

I wish I knew this before switching - it was not made known to me.  I was told all the functionality was the same.  I think I will just have to go back to desktop (which I would have done in the first place only I was under the impression there no longer was one other than the Enterprise which was almost $2K.  Do the Desktop versions out there still have sub accounts? If you are aware

@WaterWorks243 

As far as I know, yes, A/R sub-accounts are still part of Desktop.  I think you have until 9-30-24 to buy Pro/Premier before they're discontinued.  IMO, QB salespeople have not been trained to help their customers determine if Online works for them and, if not the ideal solution, what workarounds exist because they do exist.  But, hey, what do you expect from a company with ~$16B in revenue that has net income of over $2B?  Having great customer service would increase their revenue far more than the expense of hiring and training/re-training competent staff.  But since the C-suite can't know that for sure, it will likely never change.  It will take someone in the C-suite within Intuit that sees the value of great customer service as a competitive advantage.