Product Tips
Master Tip from The Sleeter Group: About Refunds with Credit CardsBy: Douglas Sleeter, Certified QuickBooks ProAdvisor®, PresidentThe Sleeter Group
|
|
Editor's Note: Many of you know The Sleeter Group's 2006 Mastering QuickBooks Consultant's Reference Guide as an advanced resource for solving complex problems in QuickBooks consulting. If you’ve ever struggled with advising a client on how to refund clients by check or credit card – or found yourself wondering the same while cleaning up a client's files, here is a discussion on how to handle the chore, complete with step-by-step instructions and screenshots.
There are several ways to refund customers. Most of the methods are simple. However, occasionally the refund can be tricky if you’re refunding by credit card. This article discusses how to handle refunds of overpayments, and what to do if you end up with a negative credit card deposit total for the day.
The article makes reference to our Journal Entries bank account that I use to deal with several tricky transactions in QuickBooks. This account is simply a clearing account called Journal Entries, and you should set it up as a bank account type. It should always have a zero balance.
If a want to issue a refund, for overpayments or other existing credits, follow this procedure.
Step 1: Display the payment that “caused” the overpayment. In this case, it was the payment from Bob Mason on 1/30/06. See Figure 1.
Step 2: Click Refund the amount to the customer in the lower left of the payment screen (as shown in Figure 1).Then click Save & Close.
Figure 1. Create a Check Coded to Accounts Receivable.
Step 3: Click Yes on the Recording Transaction screen to confirm your changes.
Step 4: On the Issue a Refund screen, enter Refund of overpayment in the memo field and then click OK (see Figure 2.)
Figure 2. Issuing a Refund for a Customer Overpayment.
Step 5: If you are crediting the customer’s credit card, change the Issue this refund via field to VISA (or other card name) as shown in Figure 3.
Step 6: Then click OK to record the refund.
Figure 3. Refund Created from a Payment Screen with an Overpayment Amount.
Step 7: If you use the QuickBooks Merchant Account service, you should click Process credit card refund when saving before you save the refund transaction. This will process the actual credit to the customer’s credit card.
Step 8: When you refund by credit card, QuickBooks will credit the Undeposited Funds account and tag the transaction with the payment type you selected on the refund. The next time you record a deposit, you’ll see the negative amount in the Payments to Deposit screen (see Figure 4). Select this amount along with all the positive amounts for the day and the total “net” deposit will be recorded in your register.
Step 9: Click Record Deposits on the home page.
Figure 4. The Credit Card Refund Shows as a Negative Amount in the “Payment to Deposit” Screen.
Negative Deposits
If the total of a deposit is negative (as you see here because of the refund by credit card), you’ll have to trick QuickBooks into making the “negative” deposit.
Step 10: On the Payments to Deposit screen, select all items (all positive and negative amounts) for whatever payment method you’re working on. In this case, it’s just the single negative amount for Bob Mason’s VISA refund. Then click OK.
Figure 5. Selecting Items to be Deposited. The Deposit Amount Is Negative.
Step 11: On the Make Deposits screen, change the Deposit To field to your Journal Entries bank account (or other bank account), and add an additional line at the bottom of your deposit, coded to your checking account with the amount necessary to zero out the deposit. See Figure 6 to show this. Then press Save & Close to record the “negative” deposit.
Figure 6. Recording a Negative Deposit When Total Credit Card Credits Exceed Sales for the Day.
Step 12: The checking account register will show the “negative deposit,” as shown in Figure 7.
Figure 7. Negative Deposit in Check Register.
Adapted and reprinted with special permission from Mastering QuickBooks Consultant’s Reference Guide 2006. Copyright © 1998-2006 The Sleeter Group. All rights reserved.
Last Updated: 11/09/2006
