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Level 3

How to record credit/refund back from inventory purchase

Hello,

I have my product expense account to "Cost of Good Sold"  & inventory as "inventory asset" when creating the product/service. Then PO/Expense it out using that product. Month later, i got a credit/discount from the same vendor, without having to return the item they gave me a price match discount since i paid a much higher price at the time of ordering. My question is the credit within the credit card bank feed. I notice making a credit card credit would not work since you need to input a qty higher then 0 which mines has nothing returned, so only other way out i can think of is just categorizing it within the feed without a match.

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Best answer April 05, 2020

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Level 11

How to record credit/refund back from inventory purchase



@mikelu9661 wrote:

Hello,

I have my product expense account to "Cost of Good Sold"  & inventory as "inventory asset" when creating the product/service. Then PO/Expense it out using that product. Month later, i got a credit/discount from the same vendor, without having to return the item they gave me a price match discount since i paid a much higher price at the time of ordering. My question is the credit within the credit card bank feed. I notice making a credit card credit would not work since you need to input a qty higher then 0 which mines has nothing returned, so only other way out i can think of is just categorizing it within the feed without a match.


"How to record credit/refund back from inventory purchase"

 

Great question!

 

What you need to do is edit your original entry.

Let's say for this example, you paid $1,000 total for inventory items.

And now, they gave you a $200 credit/refund. Your new net cost is $800.

 

Go back to your original entry and make an adjustment:

  • Item Details section = $800 total for inventory items (this is your revised new inventory cost)
  • Category Details section = $200 for refund/receivable from Vendor (create a new account. Account and Detail type = Other Current Assets. Name something like Credit/Refund Receivable.)
  • You originally paid = $1000

This entry shows although you originally paid $1,000, $800 for purchased items and vendor owes you $200.

 

"My question is the credit within the credit card bank feed"

Use New account "Credit/Refund Receivable" for $200 in this example. That account should have zero balance with "in and out" transactions now.

 

Hope this helps!

 

Expense split category item.PNG

 

View solution in original post

7 Comments
Highlighted
Level 11

How to record credit/refund back from inventory purchase



@mikelu9661 wrote:

Hello,

I have my product expense account to "Cost of Good Sold"  & inventory as "inventory asset" when creating the product/service. Then PO/Expense it out using that product. Month later, i got a credit/discount from the same vendor, without having to return the item they gave me a price match discount since i paid a much higher price at the time of ordering. My question is the credit within the credit card bank feed. I notice making a credit card credit would not work since you need to input a qty higher then 0 which mines has nothing returned, so only other way out i can think of is just categorizing it within the feed without a match.


"How to record credit/refund back from inventory purchase"

 

Great question!

 

What you need to do is edit your original entry.

Let's say for this example, you paid $1,000 total for inventory items.

And now, they gave you a $200 credit/refund. Your new net cost is $800.

 

Go back to your original entry and make an adjustment:

  • Item Details section = $800 total for inventory items (this is your revised new inventory cost)
  • Category Details section = $200 for refund/receivable from Vendor (create a new account. Account and Detail type = Other Current Assets. Name something like Credit/Refund Receivable.)
  • You originally paid = $1000

This entry shows although you originally paid $1,000, $800 for purchased items and vendor owes you $200.

 

"My question is the credit within the credit card bank feed"

Use New account "Credit/Refund Receivable" for $200 in this example. That account should have zero balance with "in and out" transactions now.

 

Hope this helps!

 

Expense split category item.PNG

 

View solution in original post

Highlighted
Level 3

How to record credit/refund back from inventory purchase

Hello,

I'm sorry, but I'm totally confused, do you perhaps have a step by step illustration guide i can follow upon? as if I edit the original expense from $1000 to $800, it would not match with the feed of the original charge if that's what I'm being told to do.

Highlighted
QuickBooks Team

How to record credit/refund back from inventory purchase

Hi, @mikelu9661.

 

I'll guide you on how to create a vendor credit:

  1. Click the New button.
  2. Under Vendors, select Vendor credit
  3. Choose the name of your vendor.
  4. On the Category column, choose Credit/Refund Receivable and $200 for the Amount.

To create a new account according to @vpcontroller please refer to the screenshot below: 
 Capture.JPG

       5. On the Product/Service column, enter the product and $800 for the Amount

 

You can also check this article for more detail: Applying vendor credits.

 

That shall do it. If you have further questions please don't hesitate to post a questions below. I'll appreciate the opportunity to help. 

Highlighted
Level 11

How to record credit/refund back from inventory purchase


@mikelu9661 wrote:

Hello,

I'm sorry, but I'm totally confused, do you perhaps have a step by step illustration guide i can follow upon? as if I edit the original expense from $1000 to $800, it would not match with the feed of the original charge if that's what I'm being told to do.


@mikelu9661 

 

See the screenshot above for how to edit your original entry. 

After that, on the bank feed, all you have to do is use the same Other Current Assets account for the deposit amount.

That's all!

Highlighted
Level 3

How to record credit/refund back from inventory purchase

How would i be able to deposit the vendor credit tho? since its a credit card purchase/refund, usually I do vendor credit, then bank deposit to deposit the credit so i can match it with a bank feed to complete the credit. In this case since bank deposit don't actually have a credit card account to choose from, not sure how that part would work. But other then that yes I got the charter account part now & using it to match the received funds feed.

Highlighted
QuickBooks Team

How to record credit/refund back from inventory purchase

Hi mikelu9661,

 

You'll have to enter a deposit and link the deposit to the refund check if the vendor issues a refund check to you. Let me walk you through the steps.

 

To enter a deposit:

  1. Click + New, then choose Bank Deposits.
  2. In the Received From column, select the vendor who issued the check.
  3. In the Account column, select the Accounts Payable account.

  4. Click Save and Close.

To link the deposit:

  1. Click + New, choose Expense.
  2. Select the vendor whose refund check you deposited.
  3. Click Add in the outstanding vendor credit.
  4. Click Add in the Deposit.
  5. Click Save and Close.

For future reference, you can match bank transactions in QuickBooks Online (QBO): Match and Categorize Bank Transactions in QuickBooks Online.

 

Let me know if you need further help. I'll always be here to assist.

Highlighted
Level 11

How to record credit/refund back from inventory purchase


@mikelu9661 wrote:

How would i be able to deposit the vendor credit tho? since its a credit card purchase/refund, usually I do vendor credit, then bank deposit to deposit the credit so i can match it with a bank feed to complete the credit. In this case since bank deposit don't actually have a credit card account to choose from, not sure how that part would work. But other then that yes I got the charter account part now & using it to match the received funds feed.


@mikelu9661 

It seems like you're making this more complicated than it needs to be.

 

You actually don't need to issue Vendor Credit. Are you getting a bank deposit or credit/refund on a credit card? In either case, you will need to use one account category to add a transaction, just use the Other Current Assets account per example. It looks simple to me.

 

But if you're creating Vendor Credit, we can handle that too, just use the same for account category (Other Currents Assets). And on the bank feed, you will then need to select Vendor and for Category, select Accounts Payable (A/P). This one is a bit complicated. 

 

Hope this helps!

 

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