Every once in a while I return something for a cash refund and handling the transaction in QuickBooks isn’t intuitive. Doing them improperly can cause tax reporting errors too. The best description that I found was actually an instruction for QuickBooks online. Here is the process translated for the desktop application.
Enter the vendor refund check in the Deposits screen.
- Go the Banking tab and click Make Deposits.
- In the section for new deposits (underneath the Payments section) enter the following information:
- In the Received From field select or enter the desired vendor.
- In theAccount field, select the Accounts Payable account.
- In the Amount field, enter the amount of the check or cash refunded.
- Click Save.
Next, go to the Vendors – Enter Bills screen to enter the vendor credit.
- Click the Credit radio box at top left.
- In the Expenses section
- In the Tax field select or enter the original tax code.
- In the Account field, select the original expense account.
- In the Amount field, enter the amount of the expense (without tax).
Finally, go to the Vendors – Pay Bills screen to link the deposit with the vendor credit.
- Go to the Vendor tab and click Pay Bills.
- On the Pay Bills list, select the credit entry.
- Click the Set Credits button at the bottom of the form.
- Under the Credits section verify that the Amt. To Use matches the Credit Amt.
- Click Done to close the Set Credits dialog.
- On the bottom right click Pay Selected Bills.
- The Payment Summary dialog will appear and the Vendor name will be highlighted in bold to indicate the application of a credit.