How to handle refund on a debit card from a vendor? It’s downloaded as a bank deposit in bank feed. How can I assign that credit to the project?
It involves few steps process to handle vendor refund on a debit card to the project in QBO.
1) Create Vendor Credit (Plus sign at the top right > Vendors > Vendor Credit)
a. Select Vendor payee
b. Select same expense account used to enter original transaction
c. Enter amount
d. Select Customer/Project
2) Go to Banking (Left Dashboard > Banking)
a. Under “For Review” tab, locate refund deposit on a debit card from a vendor
b. Click the transaction row
c. Switch radio button from “Add” to “Find Match”
d. Under “Resolve difference” drop-down arrow, select “Add new transactions”
e. Under add transactions tab, enter vendor refund credit
Payee = Vendor payee (gave you refund)
Category = Accounts Payable (A/P) account
Amount = Refund amount
NOTE: If QuickBooks is not connected with the bank account (Plus sign at the top right > Others > Bank deposit). It will take to the same deposit screen.
3) Go to Pay Bills to clear both credit and deposit from vendor’s A/P account (Plus sign at the top right > Vendors > Pay Bills)
a. Select Vendor line check box to clear the account. It should be zero amount
That should do it.
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Accounting treatment in QuickBooks is exactly the same like when Vendor goes out of business prior to payment for the open balance.
If the vendor (or customer with a credit balance) goes out of business due to bankruptcy, keep it until you hear from the courts with instructions as to where to forward your payment.
In case, you do not hear from the courts (depending upon regulations in your state, you may have to leave it on the books for several years, in many states for up to 5 years), you will reverse the entry by creating a credit memo and take it as income like the one-time gain to your P&L.
If you are really interested in clearing A/P or A/R (negative balance), you can also set it up as holding liability account on your Balance Sheet.
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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
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).
It is kind of hard of believe they do not have designated “Debit Card Credit Form” (or Expense Credit Form), just like one they have for Credit Card Credit Form.
I am not excited to give this way-around approach, but it will work especially recording credit for customer job related return.
#1 create new credit card type account. Call it “debit card clearing account” (or something similar). This has be to under CREDIT CARD Type.
#2 use credit card credit form (create + sign > vendors > credit card credit form). select this newly created “debit card clearing account” just like you select other credit card name when you return products paid by credit card. This will record credit return for the customer job. It will leave with negative balance.
#3 This one is extra step you need to do. GO to “Transfer” form (create + sign > other > transfer).
Tranfer Funds from = Debit Card Clearing Account from the drop-down list
Transfer Funds to = Selection of bank account used for debit card from the drop-down list
With step #3, debit card clearing account will have zero balance. Bank account should correctly reflect deposit amount.
Done. Everyting accounting wise should be work fine.
If you like to see “Debit Card Credit” form (or Expense Form paid by Debit Card) added in future revision, add your voice here. Remember, they make improvements based on your feedback.
From the home page screen > company gear (upper right corner) > your company > feedback
Note: Just for recording debit card credit for return (and if customer job is not relevant), you can go to bank register and enter as bank deposit. Or use Bank Deposit Form (create + sign > Other > Bank Deposit
I followed the refund by a vendor. I entered as a deposit. But then it does not show in the vendor’s transaction listing. How should I really enter this type of transaction?
At this point, they do not have have any designated way to record this transaction. It is just work-around approach to show in the Vendor Center’s transaction listing.
#1 Create Vendor Credit
From the home page screen
Select “Vendor Credit” tab under Vendors heading
Choose a vendor
Make sure account selection (that be entered as account for credit entry) is the same as original account. This is to show applying credit to the same account. For example, you bought printer and expensed it to Computer Expense account . Returned it and received refund for the returned item. Use the same account to credit the refund from the vendor.
#2 Show Bank Deposit for Refund
From the home page screen
Select “Bank Deposit” tab under Others heading
Choose Bank account for deposit
Received From = Name of Vendor from the drop down list who gave you refund
Account = Accounts Payable from the dropdown chart of account
Amount = refund amount deposited to the bank
Enter other related information
#3 Unncessary extra step but got to do it
GO back to Vendors Center (blue navigation bar > Vendors > Locate specific Vendor), you will notice “1 Open bill” message under Pending Bills for that Vendor. This could be flawed in QBO design at this time.
Select “Make payment” button under “Action” column
New “Bill Payment” screen will open
You will notice in and out with zero amount transaction
Change Ref number to “blank”
Save and Close
“1 Open Bill’ message is gone now.
Again, this is unncessary step in new QuickBooks Online.
How should I really enter refund by a Vendor in new QuickBooks Online QBO
Do not use “Paying Bills” feature when you want apply a specific vendor credit.
It seems there is even a design flaws on “Paying Bills” feature when it comes applying a specific vendor credit when you’ve multiple vendor credits in Vendor’s account. Credit column provides no ability to select specific reference to available vendor credit.
Alternative solution is to create payment Check from the Vendor’s Center.
From the home page screen
Go to blue navigation bar on the left
Select Vendors tab
Select Vendor that needs to be paid
Select checkbox of “Bills” need to be paid and also select checkbox of Vendor Credit to apply against this payment
GO to Create New button (far right) and select “Check” from the drop-down
It will take to new Check#To Print screen
Go to far right and select “Add All” under “Add to Check”
It will show paid check amount with outstanding bills as well as specific referenced credit
Choose “Print Check” at the bottom
Choose Preview and Print (bottom right corner)
Select Print button
Vendors – how to apply a specific vendor credit against vendor bill payment in new QuickBooks Online
Step # 1
Issue Vendor Credit
(+ sign > Vendor Credit under Vendors)
Make sure to use the same account originally used
Step # 2
Deposit refund to the bank
(+ sign > Bank Deposit under Other)
Received From = Vendor’s Name
Account = Accounts Payable (A/P)
Step # 3
To clear A/P as Bill payment (step # 1 and step #2)
Why step# 3 > step # 2 bank deposit does not apply to specific bill select Vendors > locate Vendor > click “Make Payment” button, far right > Bill Payment screen will open with zero amount> Save and Close
(1) Try “Vendor Credit” form (from create “+” sign > Vendor Credit under Vendors header) If you are using “Enter Bill” form to enter vendor bill and returning to the same vendor, you could use Vendor Credit form. It will show negative Vendor balance.
(2) For returning credit for Credit Card purchases > use Credit Card Credit form
(3) For returning credit for Debit Card purchases (or purchases paid by check) > use Make Deposits. In new QBO, they do not have Debit Card Credit or or Check Credit Expense Credit form at this time. There is a known problem using Make Deposits feature. It will not show up in the Vendors center. This is a huge known problem in new QuickBooks Online.