P&L statement income figures distorted when refunds have been issued

I’ll help you resolve this, @Florida Clay.

Since the account registers correctly report the adjusted total, there’s a possibility that a data issue is the reason behind this. You’ll want to make sure your QuickBooks for Mac is up-to-date to prevent report discrepancies and other company file concerns.

Here’s how:

1. From the QuickBooks▼ dropdown, select Check for QuickBooks Updates.
2. Select Install Update.
3. When prompted, click Install and Relaunch.
4. When the update is complete, QuickBooks for Mac automatically opens.

After this process, run the Profit and Loss report once more. If you get the same result, you can use the Verify and Rebuild Data tool. This feature detects faults in the data and repairs them with one click.

And if you want the same settings when you access the report in the future, you can memorize them.

I’m always here to help if you have any other questions or concerns about reports. Just add them to your reply. Have a good one!

Thanks for your response.

QB reports that I am running the most up-to-date version, so that is not it.

There is no data error to fix, inasmuch as the data on the account register for each income item is correct.  It is just that the correct amount on the register is not reflected correctly on the statement.  The amount on the statement ignores the negative numbers on the register reflecting deductions for refunds.  This appears to be due to faulty code in the reporting element resulting in negative numbers in the data being ignored.

Allow me to share some additional information about your Profit and Loss (P&L) statement, Florida.

The P&L report displays your income and expenses. Income is the amount your business takes in while expenses are what it spends money on. If you want to see the snapshot of your business's accounts receivable, liabilities, and owner's equity or capital, you can open the Balance Sheet report.

If the amount is not reflected on your report accordingly, you can try to review the transaction created. Let's make sure that the correct account is used. Otherwise, you can delete and recreate the refund to narrow the result.

1. Open the refund transaction.
2. Select Delete.
3. Hit OK to confirm the action.

And, here's how you can re-issue the refund in QBDT for Mac: Create and apply credit memos in QuickBooks for Mac.

On the other hand, you can customize your report to show how the numbers are formatted and how negative numbers appear. You can check out this link as your reference: Customize reports in QuickBooks Desktop for Mac.

If you have any other follow-up questions about your P&L statement, let me know by adding a comment below. I'm more than happy to help. Wishing you a good one!

I received an email (computer generated?) from MadelynC asking whether her response had resolved the issue.  It did not, as shown by a previous response to her comment.  Nor did the reply by Angelyn_T. 

As for the latter, while taking the time to respond is genuinely appreciated, all but one part of that response (suggesting running data rebuild) was just basic accounting information irrelevant to the problem.  As an aside, my undergraduate degree is in accounting.  I know what a P&L and a Balance Sheet are and how they work and I know what accounts to use.  The suggestion to delete the refund transactions and instead use “Create and apply credit memos in QuickBooks for Mac.” was inappropriate, inasmuch (as my question shows) that was what was done in the first instance—18 times to be exact, as that is the number of refunds involved, all with the same result.  And the question has nothing at all to do with physical report formatting.

Here is an update.  

First, I did run the data rebuild. A problem of some sort was corrected and QB now reports that no data problem had been detected when I ran verify afterward.

However, the problem with the income items totals being overstated on the P&L remained.

I used a work-around for the QB flaw described in my question that distorted the income item totals in the P&L.  Rather than deducting the refunded amounts from the income items, the preferred way to do it, I created a Refunds master expense account with subaccounts to track the three different income items being refunded and used those on the refund credit memos.  This removed the negative numbers the report was ignoring on the income items registers and therefore the income items are now correctly reported since there are only positive numbers left on that register.

Unfortunately, there is now a new problem.  The new expense master account, with its subaccounts, does show up on the P&L, but only partially and with the wrong totals.  Here is what shows up on the P&L:

Refunds to Members

Early Registration Fee Refunds 650.00

Tour Refunds 110.00

Total Refunds to Members 760.00

Internally, QB is recording all these expense transactions correctly on registers for the master expense account and its three subaccounts and all these have the correct data and totals.  If the P&L had brought in that data as it should have, here is how the data should have been reported:

Refunds to Members

Early Registration Fee Refunds 9,750.00

Mart Refunds 100.00

Tour Refunds 2,640.00

Total Refunds to Members 12,490.00

Thank you for getting back to us and sharing detailed information about your concern, @Florida Clay.

Let's make sure your profit and loss report shows accurate data.

The date range of your profit and loss report may haven't been set properly. That's why it shows incorrect total amounts. You'll want to make sure the date is set according to the data you want to see on the report. Please know that the account register shows the total amount of all the transactions created, while the profit and loss report depends on the date range. To change the date range on the report, you can simply click the Dates drop-down and select All.

If you get the same result, I recommend reaching out to our QuickBooks Support Team. This way, they can further check on this matter and provide additional troubleshooting steps to get this fixed. To reach them, please follow the steps below:

1. Go to the Help icon and select QuickBooks Desktop Help.
2. Click Contact Us.
3. Write your concerns in the description box, then select Continue.
4. Select which one of the support options you'd like to use.

You might also want to learn about customizing and memorizing reports in QuickBooks Desktop. These articles will guide you through the steps:

• Customize reports
• Create, access, and modify memorized reports

Should you need further assistance running reports in QuickBooks Desktop, I'm available here to help any time!

Thank you Mark.  I was using the All Dates range, so that's covered.  I'll see if I can get in touch with the QuickBooks Support Team on Monday.

Clay

@Florida Clay 

RE: Unfortunately, there is now a new problem. The new expense master account, with its subaccounts, does show up on the P&L, but only partially and with the wrong totals. Here is what shows up on the P&L:

This seems like basically the same issue you originally had, only with different accounts.

Is the P&L on a cash basis? If so, then the credit memos will only appear on it if they are "paid", either by applying them to an unpaid invoice or by issuing a refund check.

If in your case the invoices were paid and then the items returned, which triggered a credit memo, then if you are carrying the credit on the customer account, to be used against a future sale, the credit won't appear on a cash basis P&L until that time.

Could this be what you're seeing?

No.  All the credit memos were refunded.

Clay

Are the refund checks applied to the credit memos, paying them off? You can check by opening the credit memos and checking their history  (press Ctrl-H to open a window that shows the transactions applied to the credit memos.)

BigRed,

Control H does not work in QB Desktop 2019 for Mac, at least not when you use the Home Page "Refunds and Credits" routine to generate the memo and issue the refund check, and the History icon at the top of the Credit Memo window is grayed out. 

One curiosity related to these refunds is that if I look at a refunded customer's account in "Receive Payments," the refund check shows in the "Outstanding Invoices/Statement Charges" list and the refund check is neither.  Of course this may be something that flows from the bug in QB that incorrectly charges the refund check to Accounts Receivable when you apply the credit memo to the refund??

And it is more than strange the the P&L would only show refunded amounts for two line items for one of the 18 refunds instead of all of them since all the refunds were handled in exactly the same way.  (I think the P&L only showed 2 of the 3 sales items for that one refund because it was to a customer that had not purchased the third item, by the way.)

Big Red,

A postscript to the reply I just posted a few minutes ago.  (I can't edit it because it hasn't cleared yet.)  Thought this might clarify what's going on a bit more.

There were 18 refunds all charged to three (now later it's four) line item subaccounts, as applicable, under a master expense account in exactly the same way.  What the P&L should show is a listing for the master account with the now four expense subaccounts reported under that title with the grand total for each sub expense account and then a grand total for all four.  What it does instead is just pick out one of the 18 refunds and report that.

I just wanted to add a little "your results may vary" note for anybody following this thread.  When issuing a simple refund you might, or might not, have the problems that I've had issuing refunds in QB Desktop 2019 for Mac, described in this and a related thread, depending on what version of QB you are using..

I just watched a recent (2021) YouTuber's tutorial on the subject.  Using the "Refunds and Credits" routine on the home page, the presenter's version of QB Desktop (I don't know for what computer platform or year) brought up a Credit Memo with "Save & Close," "Save and New" and "Clear" buttons at the bottom.  When he clicked "Save & Close," a form came up with choices to pick including "Give a Refund." Picking that made a form came up to fill in relevant info (the customer's name, whether the refund was to be issued by cash or check, the bank account to use if by check, the list of sales items being returned, etc.) Save that and your done (except for printing the check if you choose to do that).

In QB Desktop 2019 for Mac, which I am running, there is no "Save and Close" button, only a "Cancel" button and a "Save" button and unlike the presenter's version, there is an icon at the top of the credit memo screen you click to issue a refund.  When you do that, a check screen comes up rather than the "Issue a Refund" screen.  I can't say if the presenter's version would have created the refund problems that QB Desktop 2019 for Mac created or not as I don't have access to it.

In another video, I saw that QB online takes a third approach to issuing a simple refund.  With it you click on a "New" icon on the left side of the home screen, you can choose to create a refund receipt where you enter all the info about the refund and choose the bank on which the refund check will be drawn.  This appears to short circuit the credit memo all together, which would hopefully eliminate all the "Refund and Credits" routine headaches I've had.  This seems like a hugely better way to do it, but as far as I can tell there is no similar option on QB Desktop 2019 for Mac.

RE: the History icon at the top of the Credit Memo window is grayed out. 

That likely means the credit memo has no history, which means the refund check is not applied to it.  In turn, that means it won't usually appear on a cash basis P&L.

RE: if I look at a refunded customer's account in "Receive Payments," the refund check shows in the "Outstanding Invoices/Statement Charges" list and the refund check is neither. 

If a refund check appears as a line item on the receive payments table, that means it isn't applied to anything / doesn't pay the credit memo you created it to refund.

QB windows has a report called "Open Invoices" but really it shows every type of open transaction for a customer, including unpaid invoices, unapplied payments, unapplied credit memos, and unapplied refund checks, among others. I think QB Mac has the same report. If you see the credit memos and refund checks on that report with an open balance, they are unapplied/unpaid and that is why they don't impact your cash basis P&L.

To resolve this, use the receive payments window to apply the outstanding credit the credit memo creates to the refund check.  Then they'll both be "paid" and the credit memo will then impact your cash basis reports.

Yes, there is an “Open Invoices” account.  It’s a sub of the “Customers and Receivables” reports. 

The accounts of the customers who got the refunds show up on that report.  For each, there are line items for the credit memo and for the check and zero balances.

The problem with the incorrect display of the refund expense account and its subaccounts has been resolved, well, sort of.  The set of books that gave rise to all of these problems was a cash-basis set.  When in the course of trying numerous things, when I changed the basis of reports from cash basis to accrual, all of the refund expense data magically appeared accurately as it should.

The bottom line seems to be that, while there is nothing to indicate that or warn a user, the process of generating refunds via the "Refunds and Credits" routine in the QB home screen is designed only for accrual accounting and just does not work correctly for cash basis accounting or cash basis reports.