Issue a Refund - QuickBooks Desktop

Overview

If your client has requested a refund for a prior payment, there are 3 ways to account for this in QuickBooks Desktop.

1. Retain as available credit
   • Used if you plan on applying the credit to a future invoice
   • Original invoice remains marked as paid
2. Give a refund
   • Reduces your AR and your bank account balance
   • Original invoice remains marked as paid, but the transaction is washed out 
3. Apply to an invoice
   • Apply the refund to another unpaid invoice
   • Original invoice remains marked as paid

How To

Follow the below steps to properly account for a refund in QuickBooks Desktop.

Click Refunds & Credits on the Home page of QuickBooks Desktop

Select the proper customer and add the line item(s) from the invoice which you would like to issue the refund for. The below example is issuing a refund to Adam's Candy Shop for an invoice which contained "Installation Services" for $35

Click Save & Close then select the option you would like

If you chose Give a Refund, fill out the Memo field below with information which invoice this refund is for. Click OK and you are good to go!

If you chose Apply to an Invoice, select which open invoice to apply this credit for. Click Done and you are good to go!

Check Your Work

If you selected "Issue a Refund", you should see a similar entry to the below in your Chart of Accounts for your bank account.

If you selected "Apply to an Invoice", select the invoice which you applied the credit to. You should see the Credit Memo applied to the invoice by clicking Transaction on the right-hand side.

If you selected "Retain as available credit", select the credit memo which you created by heading to the Customer and viewing credit memos. You should see no associates transactions on the credit memo after clicking Transaction on the right-hand side.