When we receive cash from a vendor, how do we apply it to a credit memo which has been posted in accounts payable?

I'll show you how to record a vendor credit when you receive a refund check from your vendor, Paul.

You can record a vendor credit and ensure it is allocated to the expense account. Then, input a bank deposit for the refund check you received and connect both transactions using the Pay Bills function. I can walk you through the steps.

Here's how:

1. Click the + New button, then select Vendor credit.
2. Choose the vendor from the drop-down.
3. Select the Category details or Item details depending on how you record your purchase.
4. Hit Save and close.

Then, record a bank deposit to the refund check.

1. Click the + New button and choose Bank Deposit.
2. Select the appropriate credit card account where you got the refund.
3. In the Add funds to this deposit section, fill out the following fields.
   • Received from: Select the vendor who gave you a refund.
   • Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
4. Click Save and close.

After completing the task, you can proceed to connect the bank deposit with the vendor credit using the Pay Bills feature. This step is crucial for maintaining the accuracy of your vendor expenses.

1. Click the + New button, then select Pay Bills.
2. Choose the bank deposit you created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
3. Hit Save and close.

I want to make sure I don't forget this information. Here's an article that provides further instructions on how to record a refund from a vendor: Enter vendor credits and refunds in QuickBooks Online.

You may also be interested in taking a look at this article, which explains how to access your transaction history with your vendors in QuickBooks Online: How to view and edit vendor transactions in QuickBooks Online.

Let us know if you need further assistance recording a credit memo in QuickBooks Online. I'm always here to help. Have a great day.

I am having a problem with this answer. I recorded the vendor credits when we received them. Then the refund check came and was deposited and recorded on the vendor's account.

However, when I try to do the third step, using "Pay Bills", I get an error message when trying to save the transaction. It says "-13203 You can't apply more credits than there are bills due."

Now what?