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Sales: Creating a credit memo or refund

If a customer returns something, then you give them a credit memo.

If you're refunding money to a customer, create a credit memo first, then write a refund check.

video Watch a video on how to create a credit memo or refund.

To create or edit a credit memo
  1. Choose Customers > Create Credit Memos/Refunds. How do I use this form?
  2. To create a credit memo, click the "Create a Credit Memo" on the left panel or click the + at the bottom of the list. To edit a credit memo, select a credit memo in the list on the left panel and edit the information.
  3. Enter the information for the credit memo/refund, and click Save.

Note: You can also create sales forms using the Customer Center and Transaction Center

What's on a credit memo?
  • Customer:Job. Select the customer or job you want to create the credit memo for. You can also enter a new customer:job name, and QuickBooks will prompt you to set it up. QuickBooks will automatically alert you if you choose a customer:job that has outstanding billable time or costs.
  • Class. If you're using classes, choose which on you want to use. (If you don't see this, you need to turn classes on in Preferences.)
  • Customer. The address you have for the customer displays here. This is how the customer contact information will appear here. You can make any changes you need to.
  • Date. Today's date, which you can change. Tip: Press + to increase the date by one day; press - to decrease the date by one day.
  • Credit No. QuickBooks automatically increments this number by one for each new credit memo. Tip: Press + to increase the number by one; press - to decrease the number by one.
  • PO Number. If there's a related purchase order (PO), enter that PO number here.
  • Item. Select what you're creating the credit memo or refund for. You can include anything on the Items list here. You also enter a new item, and QuickBooks will prompt you to set it up. Tip: If you need to insert an item between two others, select the item line where you want the new one and choose Edit > Insert Line. Likewise, if you want to delete an item, select the item then choose Edit > Delete Line.
  • Description. The description of the item you entered when you created the item. You can change this if you need to. Tip: You can enter multiple lines for your description, up to 4095 characters. Use Option-Return to put in a line break.
  • Quantity. How many of the items are you crediting the customer for? This could be 400 antennaes or 10 hours of web design. If you leave this blank, QuickBooks assumes the quantity is 1.
  • Rate. How much you charge for the item. If you entered this when you created the item, QuickBooks enters it for you. If you didn't or you need to change it, just edit this box.
  • Amount. This is the total amount (Quantity x Rate) for this item that QuickBooks calculates for you.
  • Taxable. If the item is taxable, click this box.
  • Customer Message. A message for your customer, either one from your Customer Messages list or a new one.
  • Tax. The tax item you assigned to the customer or the default tax if you have not assigned a tax item to the customer. QuickBooks uses the tax item to calculate the tax. You can also select a different rate from the list of tax items if you need to.
To write a refund check

When you need to refund a customer some money, create an credit memo first. Then you can write a refund check.

  1. Open the credit memo you want to use for the refund.
  2. Click Refund at the top of the window.
  3. Make sure all the information on the check is correct.
    Caution: Leave Accounts Receivable as the account in the detail area of the refund check. This ensures that QuickBooks will account for the credit and refund correctly.
  4. Click OK.

Although you have recorded both the credit memo and the check, you still need to connect the check to the credit memo so that QuickBooks can track the transaction correctly. You use the Receive Payments window to connect the two.

To connect the refund check to the credit memo:

  1. Choose Customers > Receive Payments.
  2. Choose the customer to whom you just wrote the refund check.

    You'll see the amount of the credit included in the Existing Credits field and the refund check in the bottom section of the window.

  3. Select the Apply Existing Credits checkbox.
  4. On the Refund Chk line, enter the check amount in the Payment column, if not already entered by QuickBooks, and then click OK.

    If you now choose Customers > Create Credit Memos/Refunds to display the credit memo you just entered and click Tx History, you should see the refund check listed in the Transaction History - Credit memo window.

Other things to know about credit memos: