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lyndaj
Level 2

how do i give a credit to a customer in quickbooks who pays one of my expenses directly

I have a client that is setting up their QB company and I am trying to help them by phone.  Very difficult.  Anyway, they have a client that they bill for services.  He pays for some expenses directly so they want to give him credit for that.  We bill the full amount.  Issuing a credit memo doesn't work even if we create another income account for reimbursed expenses and use that account number because it posts it as a negative.  If we apply the credit memo directly to the expense account it adds to it.  What am i doing wrong.  I want to credit A/R and debit the income account (reimbursed expenses).  Thank you.

Lynda

1 Comment 1
Catherine_B
QuickBooks Team

how do i give a credit to a customer in quickbooks who pays one of my expenses directly

Hello there, Lynda.

 

You can set up a clearing account to move money from one account to the other in cases that you cannot move the money directly. Here's how to create the account and use it: 

 

  1. From the Lists menu, select Chart of Accounts.
  2. At the bottom click Account and select New. 
  3. In the Add New Account window, select the Bank radio button.
  4. Select Continue.
  5. In the Account Name field, enter Clearing AccountBarter Account, or Wash Account.
  6. Leave the opening balance as blank and then select Save & Close.

To use a clearing account

 

  1. Click Company and select Make General Journal Entries.
  2. Add the AR or AP from which you are moving money.
  3. Add the Clearing account.
  4. Click Save & New to create a second Journal Entry.
  5. Add the Clearing Account.
  6. Add the AR or AP account to which you moving money.
  7. In either Pay Bills or Receive Payments, link the Journal Entries together.
  8. Click Save & Close.

I'd still suggest reaching out to an accountant to help you select the correct accounts and ensure that you're able to credit the Accounts Receivables account and debit the income account so we don't mess up the books. 

 

You also have another option to record it as a billable expense. After you've marked it billable to the customer, you can manually enter a credit memo with the same amount paid to the customer. The remaining balance of the invoices is what you'll send to them. 

 

Let me know if you have other questions about handling customer transactions. Take care!

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