How to Record a Refund Check from a Vendor in QuickBooks Desktop & QBO




QuickBooks users have the ability to record the refunds they receive from a vendor. In this article, we will talk about the complete process of how to record a refund check from a vendor in QuickBooks Desktop as well as in QuickBooks Online. Select the appropriate scenario and follow the steps to record the refund in QuickBooks correctly.

How to Record a refund check from a vendor in QuickBooks Desktop

Case 1: The vendor sends you a refund check for a paid bill

  • Record a Deposit of the vendor check:
    • Go the banking menu and click make deposits.
    • The payments to deposit window may appear, click ok.
    • Go to the make deposits window, click on received from the drop-down and choose the vendor who sent you the refund.
    • In the from account drop-down, choose the appropriate accounts payable account
    • Go to the account column, fill the actual amount of the vendor check.
    • Enter a memo, the check number, the payment method, and the class although this is optional.
    • Click save and close.
  • Record a Bill Credit for the refunded amount:
    • Go to the vendor’s menu and select enter bills.
    • Select the credit option button to account for the return of goods.
    • Enter the vendor name.
    • Click on the Expenses tab and enter the accounts on the original bill.
    • Go to the amount column, enter the appropriate amount for each account(the amounts may have to be prorated).
    • Click save and close.
  • Link the deposit to the bill credit:
    • Go to the vendor’s menu, select pay bills.
    • Verify the deposits that match the vendor check amount.
    • Select Set credits and apply for the bill credit you created earlier then click done.
    • Click on pay selected bills, then click done.

Read also: How to write off Bad Debt in QuickBooks Online and Desktop?

Case 2: The vendor sends you a refund check for returned inventory items

  • Record a Deposit of the vendor check:
    • Go to the Banking menu, select Make deposits.
    • Then the Payments to Deposit window may appear, click OK.
    • Go to the Make Deposits window, click on the Received from the drop-down and select the vendor who sent you the refund.
    • Go to the From Account drop-down,  select the appropriate Accounts Payable account.
    • Go to the Amount column, enter the actual amount of the Vendor check.
    • Enter the remaining information in the Deposit account.
    • Click Save & Close.
  • Record a Bill Credit for the returned items:
    • Go to the Vendors menu, select Enter Bills.
    • Select the Credit option button to account for the return of goods.
    • Enter the Vendor name.
    • Click on the Items Tab.
    • Enter the returned items with the same amounts as the amount on the refund check.
    • Click Save & Close.
  • Link the deposit to the Bill Credit:
    • Go to the Vendors menu, select Pay Bills.
    • Verify the Deposit that matches the Vendor check amount.
    • Choose Set Credits and apply the Bill Credit you created earlier.
    • Click Done.
    • Click on Pay Selected Bills then click Done.

For Example rebates, reward incentives, refunds, reimbursements, or checks issued by vendors to cash out an existing credit.

  • Record a Deposit of the vendor check:
    • Go to the Banking menu, click Make Deposits.
    • Then the Payments to Deposit window may appear, click OK.
    • Go to the Make Deposits window, click the Received from the drop-down and select the vendor who sent you the refund.
    • Go to the Account drop-down, select the appropriate Accounts Payable account.
    • Go to the Amount column, enter the actual amount of the Vendor check.
    • Enter the rest of the information in the Deposit.
    • Click Save & Close.
  • Record a Bill Credit for the amount of the Vendor Check:
    • Go to the Vendors menu, select Enter Bills.
    • Select the Credit option button to account for the return of goods.
    • Enter the Vendor name.
    • Click on the Expenses Tab and enter the Accounts you would normally use for refunds.
      Note: If you are not sure which account to select, we recommend you to contact your accounting professional.
    • Go to the Amount column, enter the appropriate amount for each Account (the amounts may have to be prorated.)
    • Click Save Close.
  • Link the Deposit to the Bill Credit:
    • Go to the Vendors menu, select Pay Bills.
    • Verify the Deposit that matches the Vendor check amount.
    • Choose Set Credits and apply the Bill Credit you created earlier.
    •  Click Done.
    • Click on the Pay Selected Bills then click Done.

Case 4: A vendor sends a refund check on behalf of the original Vendor

  • Create a deposit for the vendor who sent the refund check:
    • Go to the Banking menu, select Make Deposits.
    • the Payments to Deposit window may appear, click OK.
    • Go to the Make Deposits window, click the Received from the drop-down and choose the vendor who sent you the refund.
    • In the From Account drop-down,  select the appropriate Accounts Payable account.
    • Go to the Amount column, enter the actual amount of the refund.
    • Enter a memo, check number, payment method and class although this is optional.
    • Click Save & Close.
  • Create a Bill for the Amount of the Deposit and apply it to the Deposit:
    • Go to the Vendors menu and select the Enter Bills.
    • Go to the Vendor field, choose the vendor who has sent the refund.
    • Go to the Amount Due field, then enter the amount of the refund.
    • Click on the Expense Tab.
    • Go to the Account field, select a Wash account.
    • Go to the Amount field, enter the amount of the refund.
    • Click Save & Close.
    • Now Go to the Vendors menu and select Pay Bills.
    • Select the Bill and click on the Set Credit.
    • Select the Credit and press Done.
    • Click Pay Selected Bills and then click Done.
  • Create a Credit for the Original Vendor:
    • Go to the Vendors menu, select on the Enter Bills.
    • Choose the Credit option button.
    • Go to the Vendor field, select the vendor who sent the refund.
    • Go to the Credit Amount field, enter the amount of the refund.
    • Click on the Expense Tab.
    • Go to the Account field, select the account used on the original Bill.
    • Go to the Amount field, enter the Amount of the refund.
    • Click Save and then Close.
  • Create a Bill for the Amount of the Credit which is affecting the Wash Account and then apply the Bill to the Credit:
    • Go to the Vendors menu, select Enter Bills.
    • Go to the Vendor field, select the vendor who sent the refund.
    • Go to the Amount field, enter the amount of the refund.
    • Click the Expense Tab.
    • Go to the Account field, select a Wash account
    • Go to the Amount field, enter the amount of the refund.
    • Click Save & Close.
    • Go to the Vendors menu and select Pay Bills option.
    • choose the Bill and click on the Set Credit.
    • choose the Credit and click Done.
    • Click Pay Selected Bills and then click Done.

Case 5: The vendor sends you the refund as a credit card credit

  • Go to the Banking menu, select Enter Credit Card Charges.
  • From the Credit Card drop-down, select the credit card account.
  • Select the Refund or the Credit option button.
  • Choose the appropriate Vendor name and enter the Date, Reference Number and the Amount.
  • Enter a relevant memo to describe the transaction.
  • If you have returned Items, click the Item Tab and enter the Items and Amounts from the refund.
  • If the refund does not have Items, click on the Expenses tab, select the appropriate Accounts and enter the Amount.
  • Click Save & Close.

If you are not sure about it ask your accountant, or get help how to find an accountant.

Easy steps to record a refund from a vendor in QuickBooks Online

The vendor can issue a credit document stated that you no more owe the amount or they can also issue a refund check. In both cases, we’ll teach you how to record a refund from a vendor in QuickBooks Online.

In the first case, when a vendor issued a credit document then you need to record it on the vendor credit and apply it when you pay the vendor’s bill.

And in the second case, when a vendor issued a refund check then you still have to record it to the vendor credit but also you need to add the deposit for vendor check and link it to the vendor credit.

1. Enter the vendor credit

  • Click on the ‘+New’.
  • Then from the ‘Vendors’ list select the ‘Vendor credit’ option.
  • Browse the vendor from ‘choose the vendors’ drop-down menu.
  • Enter the issue date of the credit document/refund check.
  • At the top right corner enter the credit amount.
  • Next, In the account details select the account you used for original billing.
  • In the Item details, select the items that you returned to the vendor.
  • You can also attach an electronic copy of the credit.
  • Lastly, save and close from the bottom right.
Record Refund from Vendor in QuickBooks Online
Vendor Credit Window-record refund from Vendor

And if you receive a check then you have to record refund check from a vendor in QuickBooks Online. 

2. Deposit refund check of vendor

To record refund check QB Online after recording it into vendor credit you also need to deposit check in the QuickBooks.

  • Click on the ‘+New’.
  • Then from the ‘Others’ column select the ‘Bank deposit’ option.
  • In the ‘Add new deposit’ section fill all the required fields.
  • In ‘Received from’ enter the name of the vendor.
  • In ‘Account’ select the account payable.
  • In the ‘Amount’ field enter the amount of refund.
  • Click on the downward arrow on the side of ‘Save and new’ and select the ‘Save and close’ option.
Record a refund from a vendor in QuickBooks Online
Bank Deposit Window in QuickBooks Online

For linking vendor credit and bank deposit, we’ll be using expenses. this will help in keeping accurate vendor expenses.

  • Click on the ‘+New’ icon.
  • Then from the ‘Vendors’ column select the ‘Expenses’ option.
  • Select the vendor that issues credit document/refund check.
  • On the right hand add the current transaction in both Vendor credit and bank deposit.
  • After adding the net balance of the bill payment will become zero. 
  • At last ‘Save and close’.
Record a refund from a vendor in QuickBooks Online
Expense window in QuickBooks Online

This is the whole procedure to record a refund from a vendor in QuickBooks Online.

4. Record a credit card refund in QuickBooks Online

This method is used when you make a purchase using the business credit card and for some reason, you have to return the product. Then the vendor usually will issue a refund to the credit card account that you used.

  • Click on Chart of Accounts from the ‘gear’ icon on the left. 
  • Select the credit card from the list and then click on the ‘view register’ on right.
  • Next in the ‘Add CC expense’, drop-down menu select ‘CC Credit’.
  • A new window named ‘Credit Card Register’ will appear in this you need to fill some details.
  • In account, check whether you select the right credit card or not.
  • Next, enter the date you returned the product.
  • In the Payee account, select the vendor to whom you return the product.
  • In Memo, you can add a relevant description.
  • In the Payment section, enter the price of the returned product.
  • After correctly enter the fields. Click on the ‘Save’ on the bottom right. 
Record a refund from a vendor in QuickBooks Online
Credit card refund window in QuickBooks Online

Frequently Asked Questions

How to enter a customer refund in QuickBooks?

If a customer mistakenly overpaid you or pay in the advance for the products and services then cancel the order and you need to enter a refund so for that first go to ‘+New’ then select ‘Check’ or ‘Expenses’. Then enter the customer name in Payee and the account in which payment received. In the first category select ‘Account Receivable’ and enter the amount of payment then ‘Save and Close’


Above we covered all the methods to record a refund from a vendor in QuickBooks Online as well as in QuickBooks Desktop. You can perform any of them as per your requirements.

If anything related to QuickBooks accounting software is still bothering you and you are seeking for an expert who can drag you out from this situation. Then our team of QuickBooks ProAdvisor with experienced accounting professionals and certified technicians will help you and instantly fix your problems. We provide 24/7 service so don’t hesitate to call us anytime at our toll-free number +1-855-441-4417

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