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count4u
Level 1

When issuing a customer a credit memo for a defective product; inventory is return versus charged to returns and allowances... how do I fix this?

 
3 Comments 3
RenjolynC
QuickBooks Team

When issuing a customer a credit memo for a defective product; inventory is return versus charged to returns and allowances... how do I fix this?

Hi count4u,

 

To fix this, you can create a journal entry. Before doing the process, please consult your accountant for the accounts that need to be selected. 

 

Here's how:

  1. Click the Plus (+) icon located in the upper right corner.
  2. Under Other, click Journal Entry.
  3. Choose the Journal Date, and enter the Journal No.
  4. Select the appropriate accounts from the drop-down list and enter the amount under Debits and Credits columns.
  5. Click Save or Save and Close.

You can also check this article for reference: Create a Journal Entry.

 

If you need further information, feel free to reach out to us at any time. Thanks.

count4u
Level 1

When issuing a customer a credit memo for a defective product; inventory is return versus charged to returns and allowances... how do I fix this?

Hi RenlolynC,

 

Journal entries are only a band aide and do not fix the issue.  I need it to be automated and not add extra work everytime a defective item is issued a credit .

 

There has to be a way to direct the credit dollars to a returns & allowances and have the costs to other cogs inventory losses.

Rasa-LilaM
QuickBooks Team

When issuing a customer a credit memo for a defective product; inventory is return versus charged to returns and allowances... how do I fix this?

Thanks for the prompt response, count4u.


Allow me to join the conversation and help track the returned items.


The option to automatically record defective merchandise is currently unavailable. Each time you create a credit memo manually select the item to monitor the defective product.

 

Make sure to enter the amount as a positive number. This way, it won’t throw off your records.


To create the item:

 

  1. In the upper right hand, click on the Gear icon.
  2. Choose Products and Services.
  3. Click the New tab, then select Service.
  4. Enter a specific name to identify the item in the Name field.
  5. Click on Save and close.

Every business is distinct, and it goes the same way with posting transactions. Since creating the item involves different accounts, I recommend consulting your accountant for the correct debit and credit accounts to use.


This information should point you in the right direction.


If you have any follow-up questions or concerns about QBO, let me know by posting a comment below. I’ll be right here with you.

 

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