How to change transaction numbers like invoice number sequence

Transaction reference numbers help you easily identify transactions. QBO will automatically assign transaction numbers in sequence. But if you want to change the starting custom transaction number of your own, you can do so. You would want to turn the company settings ON once, assign a custom number and turn it OFF again so that QBO can identify number sequence based on the last transaction number.

A separate number sequence appears on:

  • Invoices, sales receipts, refund receipts, and credit memos
  • Delayed charges and Delayed credits
  • Estimates
  • Purchase orders

For Statements, QBO will automatically control the numbers that reference identify so you can’t change it.

QBO lets you customize your transaction numbers.

How do custom transaction numbers work?
When you turn ON custom transaction numbers:

  • You can change transaction numbers when you create or modify a transaction.
  • Transaction numbers can include letters (such as 2017-1001).
  • New transactions get new numbers (such as 2017-1002), based on the last transaction. You’ll be warned if you try to enter a duplicate transaction number.

When you turn OFF custom transaction numbers:

  • Transaction numbers are never changeable, even numbers created with custom transaction numbers on.
  • Transaction numbers are assigned when transactions are created.
  • Transaction numbers are sequential, based on the last number, starting at 1.

To turn custom transaction numbers ON or OFF from the company settings:

Click the Gear icon at the upper right corner > Your Company > Account and Settings).

 

For customer transaction numbers on sales forms:

Click “Sales” on the left, and then click the edit icon for “Sales form content”. Select the “Custom transaction numbers” checkbox, and click Save.

 

For custom numbers on purchase orders:

Click Expenses on the left, and then click the edit icon for Purchase orders. Click the “Use purchase orders” checkbox. Select the “Custom transaction numbers” checkbox, and click Save.

 

To reset your transaction numbers again:

  • Select the Custom transaction numbers checkbox, and click Save
  • Create a transaction with a new starting number.
  • Clear the Custom transaction numbers checkbox, and click Save.

 





 





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How can I transfer unapplied credit from one customer to another in QuickBooks Online

A case may occur when a customer wants to apply credit balance to an affiliated company’s open invoice.

EXAMPLE:

Customer (Mark) has a $500 credit balance. Customer (Martha) has a $500 Open Invoice. They like to clear the accounts by applying $500 credit from Mark’s account to $500 Open Invoice of Martha’s account.

One easy way to handle transfer credit from one customer to another customer is to write a Journal Entry in QBO.

Click on the screenshots below to enlarge them

Customers Page
Customers Page

Customer Mark's Account with $500 Unapplied Credit
Customer Mark’s Account with $500 Unapplied Credit
Customer Martha's Account with $500 Open Invoice
Customer Martha’s Account with $500 Open Invoice

 

To create a Journal Entry

From the home page screen, click Create+ sign

  • Click Journal Entry tab under Other heading.
  • Enter the date.
  • On the first line, from the Account drop down list, select Accounts Receivable (A/R).
  • In the Debit field, enter the unapplied amount being transferred. Example:$500.
  • In the Memo field, note the reason for the Journal Entry. Example: credit transfer to Martha’s account.
  • From the Name drop down list, select the customer name that credit is being transferred from. Example: Mark
  • On the second line, from the Account drop down list, select Accounts Receivable (A/R) again.
  • In the Credit field, enter the credit amount (same as debit amount). Example:$500
  • In the Memo field, note the reason for the Journal Entry. Example: credit transfer from Mark’s account.
  • From the Name drop down list, select the name of the customer that the credit is being transferred to. Example: Martha
  • Click Save.
Journal Entry
Journal Entry
Mark's Customer Page after Journal Entry
Mark’s Customer Page after Journal Entry
Martha's Customer Page after Journal Entry
Martha’s Customer Page after Journal Entry

 

The final step is to Receive Payment on both customer accounts so that it will show “Paid and Closed” customer status

From the home page screen, click Create+ sign

  • Go to the Customers tab and click Receive Payment.
  • Select the customer (example: Mark).
  • Make sure that the credit and Journal Entry are checked at the left (make no other entry on the Receive Payment form.)
  • Make sure “Amount received” show zero amount.
  • Click Save.

Follow the same “Receive Payment” steps as above for the customer (Martha).

Screenshot 2015-08-23 14.18.55
Receive Payment (Customer Mark)

Screenshot 2015-08-23 14.19.23
Receive Payment (Customer Martha)

Screenshot 2015-08-23 14.20.43
Customer Mark’s Page with Paid and Closed Status

Screenshot 2015-08-23 14.20.52
Customer Martha’s Page with Paid and Closed Status

If you liked this video, then please subscribe to our YouTube Channels (VPController and NewQBO) for QuickBooks video tutorials.

 

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How do you mark a bill as paid if paid by your parent company (not by your bank account or credit card)

First, you need to get some guidance from the parent company if they go through inter-company elimination process to prepare consolidated balance sheet report.

In QBO create Intercompany Accounts Payable Account (not main Accounts Payable A/P) >

you can select “Credit Card” Type > it will show as Credit Card group on the Balance Sheet. When you Pay Bills (or enter expenses), you can select this account instead of bank account > easy one step process only > however, if parent company has a problem using Credit Card type account then, you may need to set it up as “Other Current Liabilities” type account.

In that case, it becomes two step process > pay bills (or enter expenses) using Credit Card type as I/C clearing account > transfer the balance from Intercompany Accounts Payable (other current liabilities type) to Intercompany Clearing account (credit card type > new name). To transfer in QBO, you can use Transfer (create + sign > other > transfer) or write a Journal Entry (and make it reversible JE if needed).

Again, it’s a good idea to consult with your parent company who handles Intercompany accounts. And, always reconcile accounts on a regular basis.

Click on the screenshots below to enlarge them
ic payable

ic paybills

ic payable2

transfer

transfer_je

balsheet2
NOTE:
On the parent company’s books, they should record this as an intercompany accounts receivable.
In QBO for Intercompany Accounts Receivable > select “Other Current Assets” Type (not main Accounts Receivable A/R type. In QBO, you can have just one A/R).

How to write off a customer unpaid invoice as bad debt expense?

When a Customer Invoice becomes non-collectible, you will generally write it off as bad debt expense. You will create a credit memo to clear Accounts Receivable (A/R) balance and that will hit the P&L during that accounting period.

You will need to take the following steps in QuickBooks:

Step 1: Create Bad Debts Expense Account (COA)
1 create bad debts expense account

Step2: Create Bad Debts as Product/Service Item
2 create bad debts item

Step3: Create Customer Credit Memo
3 credit memo

In addition, if you want to automatically apply credit memo against open A/R balance, you will need to change the company gear and take the following steps:

From the home page screen:

  • Company Gear (upper right corner)
  • Settings
  • Company Settings
  • Advanced
  • Automation
  • Automatically apply credits
  • ON
  • Done

6 automatically apply receipts
If this setting is off, you will need to select Receive Payment. That will be step #4. This will clear both invoice balance and credit memo and will show zero balance after that.

To create a new bad debts expense (step#1):
From the home page screen:

  • Company Gear (upper right corner)
  • Settings
  • Chart of Accounts
  • New (blue button upper right corner)
  • Category Type = Expenses
  • Detail Type = Bad Debts
  • Name = Bad Debts
  • Description = Bad Debts Expense
  • Save

To create a new bad debts as product/service item (step#2):
From the home page screen:

  • Company Gear (upper right corner)
  • Lists
  • Products and Services
  • New (blue button upper right corner)
  • Name = Bad Debts
  • Description = Bad Debts
  • Income Account = Bad Debts
  • Uncheck “Is Taxable” box
  • Save and Close

To create a customer credit memo (step#3):
From the home page screen:

  • Create + Sign (top middle)
  • Customers
  • Credit Memo
  • Choose a customer
  • Product/Service = Bad Debts
  • Amount = Open invoice (or balance) write off amount
  • Memo = Indicate for record why needed to create this credit memo
  • Attachments (paper clip icon) = Attach all documents
  • Save and Close

4 customer page

5 bad debts expense

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How to write off a customer unpaid invoice as bad debt in QBO

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How can I record a credit memo to a member (customer) and also have it record an expense?

Example: My Club charges $200 monthly dues. Member bought $30 office supplies with receipt. How to record in new QuickBooks so it will show $170 Net amount due on Customer’s account screen.

My Club charges monthly dues.

  • Create Invoice for $200 as a regular invoice

 When members purchase things for the organization/club

  • Create Credit Memo

What’s Product/Service code to use on Credit Memo?

  • See attached screenshot for reference. In this example, member buying office supplies. Creating credit memo will record office supplies as expense and will show credit on the Member’s account.

With these two transactions, it should show Net amount as OPEN (Invoice as open and credit memo as unapplied) on Customer account screen (see photo#2).

office supplies

members buying

helpful video2

Helpful video

How can I record a credit memo to a member customer and also have it record an expense

How do I apply credit to an Invoice in new QuickBooks Online?

Create “Credit Memo” (Create “+” sign > select Credit Memo under Customers heading)

Go to Receive Payment (Create “+” sign > select Receive Payment under Customers heading)

  • You will notice Outstanding Invoices (Transactions) as well as available Credits. Select Invoice and Credit, match with amount received.

Customers / Clients: How do I apply credit to an Invoice

How to handle a refund to a customer for merchandise not received?

Refund to a customer for PAID merchandise not received?

  • Select “Refund Receipt” as one step process to refund a customer
  • Create + sign > Customers > Refund Receipt
  • Select Customer
  • Select Payment method
  • Select “Refund From” = Bank account if refund by Check (choose Undeposited Funds account if refunded by credit card that will show up in a batch deposit process)

Refund to a customer for UNPAID (OUTSTANDING) merchandise not received?

  • Select “Credit Memo” to reverse Sales Invoice
  • Create + sign > Customers > Credit Memo

Both entries (Refund Receipt and Credit Memo) will also reverse or add back quantity sold to inventory. Inventory is overstated. It needs adjustment.

How to adjust Inventory?

From the company gear (upper right corner) > Lists > Products and Services > Choose Product that need Inventory adjustment > New Product or Service Information screen will open > Select UPDATE button > Enter “New Quantity On Hand” (it will automatically show difference as well) > Save

What will this entry do to Inventory now?

It will reduce “Inventory Asset” account (credit) and will post to Shrinkage account debit side entry. That’s your loss portion from the cost side.

Since “Shrinkage” is a default account, you can leave it as it is or reclassify to COGS or any appropriate account as needed. You will need to write a Journal Entry to do this reclass.

How do I record a refund to a customer in new QuickBooks Online?

If you have credit balance in customer’s account (A/R) and need to refund customer by payment (by check or by online), you should be using Check or Expense under Vendors header, not Refund Receipt form which works differently.

From home page screen, click “+1” sign
Select check (or expense if you paying online) under Vendors header
Select Customer from drop-down that need refund
Go to Account under Account details = Accounts Receivable (A/R)
Amount = refund amount
Save and Close
This entry will clear customer balance due account.

Note: If you have already used Refund Receipt form for this customer, need to delete that entry. That entry all it does is, takes out money from the bank account and also will reduce the income (or selected account for product/service). It does nothing with Customer account/Accounts Receivable account.

SECOND NOTE:

When to use Refund Receipt under Customers header?

If you have originally created Sales Receipt, to invoice your customer and payment received at the time of sale, and now you need to refund money to your customer that is only time use “Refund Receipt” form.

When to use Credit Memo under Customers header?

You have originally created Invoice and received payment and account has zero balance. And, you need to refund money (for whatever reason over-billing / returned item), you will need to create Credit Memo first. And, then issue refund money, using either check (or expense) form under Vendors header.

For detailed instructional guide regarding these topics, you can also checkout our YouTube videos published for new QuickBooks Online users.

QuickBooks Online (QBO) Tutorial – Customer Invoice, Sales Receipt, Receive Payment, Bank Deposit

New QuickBooks Online Plus – How to enter various expenses in new QBO?

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How to refund to customer remaining balance of a credit memo in the form of a check to customer?

In order to refund customer by check, from the home page screen, go to plus (+) sign

  • Select “Check” under Vendors heading
  • Payee = Customer’s Name from the list (that you are writing check payable to)
  • ACCOUNT = Accounts Receivable (A/R)
  • AMOUNT = Refund check amount
  • SAVE

Go back Customer center (blue navigation bar on the left)
Locate the customer you just made the payment to. You will notice zero amount balance, but it will also say TWO open invoices. Just need to clear this taking another step. Very easy!
From home page screen, go to plus (+) sign

  • Select “Receive Payment” under Customers heading
  • Select Customer from the list
  • You will notice both check payment and credit memo with amount received as zero, all in one place checked off.
  • SAVE. DONE.

Go back to Customer center again. Everything should be cleared off now.
SEE ATTACHED SCREENSHOT PHOTOS FOR REFERENCE.

Customer Refund Check
Customer Refund Check
Receive Payment to clear zero amount
Receive Payment to clear zero amount