Credit Memo

Greetings, @VivianD.

I'd be delighted to guide you on creating and applying a credit memo to your customer’s invoice in QuickBooks Desktop.

Here’s how:

1. Go to the Customers menu, then select Create Credit Memos/Refunds.
2. Select your customer from the Customer:Job drop-down.
3. Enter the items you're giving a credit for, then hit Save & Close.

Once done,decide whether you want to apply the credit as the following, and select OK.

• Retain as an available credit. QuickBooks enters a negative amount in your Accounts Receivable (A/R) register for the credit memo. You can use this credit as payment for another transaction. If you chose to retain as available credit, you'll see the available credits in the customer payment window.
• Give a refund. You can issue the refund in cash or a check. If your customer used a credit card, learn how to refund a credit card payment.
• Apply to an invoice. QuickBooks open

You can also find this process in this help article: Give your customer a credit or refund in QuickBooks Desktop for Windows.

Let me know if you need more assistance in . I’ll be here to help again. 

Hi Katherine,

Thank you for responding!  But our situation is not just creating a credit memo.

We purchase from Company "Vendor A" a used equipment for $5,000.  We would record below.....

  Debit Asset      $5,000

  Credit A/P             $5,000

Company "A" doesn't want us to send them the 5k payment.  Instead, they want us to give me a credit memo so they can use it to purchase our products in the future.  And we do want to show a credit memo in his customer account "Customer A".   

I can't figure out this step as the credit memo is applying against the A/R.  I am not sure what needs to get done prior to issuing the credit memo.

Thanks for getting back to this thread, @VivianD.

What you've mentioned is correct. A credit memo can only be applied to an A/R account. 

I've got another workaround you can use to create a credit for this customer. We can create a journal entry, then use an A/P and A/R accounts to accomplish this task on QuickBooks Desktop (QBDT). Let me show you how.

To start, let's create a customer and vendor profile for this client. If you already created either of these two, then just create the one that you don't have. 

Once done, create a bill using its own vendor profile. Here's how:

1. Go to the Vendors menu, then select Enter Bills.
2. Choose a vendor from the drop-down list, then fill out the required fields:
   • Date - The date you received the bill.
   • Amount - The total amount of the bill.
   • Due date - The due date of the bill.
3. Select the asset account in the Expenses column.
4. Click Save to record the bill.

After that, create a journal entry and follow these steps:

1. Go to the Company menu and select Make General Journal Entries.
2. On the first line item, choose an Accounts Payable account and enter the amount in the DEBITS column. Then, select the vendor account for this client. 
3. On the second line item, choose an Accounts Receivable account and enter the amount in the CREDITS column. Then, select the customer account for this client.
4. Select Save or Save & Close.

This will now offset your client's vendor balance and create a credit on their customer's account. 

To link the bill and credit, go to the Pay Bills window and apply it to your bill payment to reduce your total payable.

If you still need more help with your credit memo, please don't hesitate to comment on this thread. The next available agent will continue to help you out. Hope I will be available at that time, too.

@VivianD 

Ignore the advice given by @ReymondO and @katherinejoyceO, it is unhelpful and doesn't answer your question. 

You will need to set your vendor up as a customer if they aren't already.  Then, create a journal entry, debit the asset, credit A/R.  You will now have the asset on your balance sheet and a corresponding reduction in A/R which serves as the customer's credit.

You can also create a credit memo and accomplish the same thing.  To do that, you need to create an item in your item list that is mapped to the asset account.