This is pretty much a question to most of those ebay sellers or those who use paypal to transact business. Mainly for customer refund/cancel transaction/returns/debits. Since we all know paypal 1099k form only put what's gross (before fees) without any debits meanings refund will not be deducted. Therefore I'm quite curious how you guys put that into handle when paying estimate taxes or tax refund season since if on QBO we do sale receipt for sale then when a refund/cancel transaction takes place, we use a refund receipt to debit the money out of our COGS, Income, Expense for fee, all pretty much reversed. It all sounds correct within quickbooks as we're reflecting what's actual balance. But since paypal 1099 include the gross & we have to deduct the refunded related fee/payment/etc, how should we handle such situation since the income in paypal's 1099 is much larger then the income within quickbook for the same amount of sales.
I know this all may sound confusing, please let me know, I'm happy to reclarify anything clearer after a response. Very much appreciated for your help guys.
The 1099-K you receive is just an info copy, information that relates to how much you sold.
That same information should be in the income line on the P&L
then returns & discounts, are posted to the returns/discounts income account.
On the P&L that returns/discount account lowers net income
As long as your total income is the same as, or larger, than the amount on the 1099-K you will not hear anything from the IRS.
That's exactly what I was thinking as well, oh god it seems that I've been recording refunds/returns/cancellation all in the wrong location. I just also did a manual refund receipt, as soon as I save & close with the product/qty / price, it automatically deduct from the P/L income line, which is not what I want. Main problem is I don't know how to record the refund into an separate refund/discount account since the product itself is linked to 1 income account when it was created. But yes what you're saying is exactly how i believe it was suppose to be done, with your confirmation now I just need to know how to make it work.
Allow me to join the thread, @mikelu9661.
In QuickBooks, there is a specific discount account. Let me guide you on how to correct it.
1. Go to the Accounting tab, then choose Chart of Accounts.
2. From the box Filter by name, search Discounts given.
3. Click the Run report drop-down arrow.
4. Select Edit.
5. From the Account window, change the account.
6. Put a check mark beside Is sub-account, click the drop-down arrow, then choose the specific parent account.
7. Hit Save and Close.
Also, if you want to learn how to refund a credit card payment, check out this article for future reference: How to refund a credit card payment.
Keep in touch if there's anything else I can do for you. I'm always here to help you out however I can.
Hello, I'm not sure if that answers my question in full but thanks for showing me how to make the discount/refund charter account. But my main question still remains, I don't see how I can record a refund using the discount/refund charter account we made. I've also looked within the link you provided with different ways to record refund, still can't find anything. I know how to record a return using a simpliest refund receipt but its recording to the P/L Income account if that makes senes, which I'm trying to find out how to handle that
Thanks for getting back here in the Intuit Community, @mikelu9661.
QuickBooks offers several methods for tracking inventory. All methods create journal entries when inventory changes occur. However, some QuickBooks users prefer to manually make journal entries to adjust for inventory changes. To affect the accounts you've created, we need to create a journal entry. I'll guide you how:
However, I advise getting with your accountant to confirm that this would be acceptable for your business. If you don't have an accountant, you could connect with a ProAdvisor specialist. They offer a free consultation to business. Simply enter your zip code and search to find one near you.
Please keep us updated on how it goes. We're always here to help.
since if on QBO we do sale receipt for sale then when a refund/cancel transaction takes place, we use a refund receipt to debit the money out of our COGS, Income, Expense for fee, all pretty much reversed.
No, you do not reverse the money, you got it, it is yours; and, the item is gone so being gone it is an expense.
If you do a refund or a customer credit, then use a non inventory item which is linked to a returns income account on the credit memo.
Ok if I'm understanding it correctly, use a refund receipt using a non-inventory product rather then the inventory product recorded in the sale receipt when the sale happened to record the refund income into a separate account.
If above is correct, my question is, what if they returned the item and its resellable, using non-inventory would not add to the qty in hand for that specific product sold, or even situation where customer order, cancels 5 min after, so nothing is shipped/packed. Pretty much the question is how would we putback the qty sold if it was never taken out with the non inventory situation.