Credit Card Refunds From Outside Processor
Do you use an outside credit card processing company and want to issue a refund through QuickBooks? One of our clients called recently to see if there was a way that they could do this in a way that they would see the refund as a reduction when they processed the day's deposits.
Here's the procedure for processing a refund in QuickBooks, with an outside credit card service, resulting in that refund being included in the daily “batch” deposit in the check register.
Step 1: Issue a credit memo for the returned item. If this is an existing customer, use their name, otherwise post the credit memo to your “Counter Sales” or “Cash Customer” type customer
If prompted when saving, select “Retain as an available credit.”
Notice here that the Item is placed back into stock, the full amount is credited, and the sales tax credit is accounted for as well. This however puts the credit into Accounts Receivable. Next we will fix that.
Create a General Journal Entry Debiting Accounts Receivable for the full amount of the refund and crediting Undeposited Funds for that same amount. The A/R line will need the name of the customer (in this example “Counter Sales”).
This moves the funds out of A/R and into undeposited funds, leaving our customer with no net effect on their balance. We do need to do a tiny bit of clean-up however.
While the net effect is zero, if you were to look at an Open Invoices report, you would see both a positive and negative figure in the amount of the refund. Let’s reconcile that!
Open the credit memo we created (you can double click on it from the open invoices report) and select the “Use Credit to” Button. From the drop down menu, select “Apply to Invoice.”
The “Apply Credit to Invoices Window will open. Make sure your Journal Entry is checked and click “Done.”
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