Quicken & Other Budget/Accounting Software/Extra Fund

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Question
QUESTION: Hi,

How to pay back to customer extra money they have paid to us? (1 time customer - so no Credit note should be issued)

What is the accounting entries for this?

ANSWER: Is the extra balance sitting as a negative in the Accounts Receivable report?
   If so

Write a check payable to the customer,  and post that check to accounts receivable
(if your software will allow that type of transaction)

  If not it will be a 2 step process:

1. For the amount of the overpayment Create a Journal entry
Debit Accounts Receivable
Credit Transfer account (this can be an other current asset account)


2. Write a check payable to the customer and post to the transfer account
  in the memo line reference refund of overpayment

In both scenario's you will need to set the overpayment credit against the
Newly created debit in the customer record.  In QuickBooks we do that with a
receive payment

Linda Saltz, CPA
Advanced Certified QuickBooks Advisor
www.qbalance.com


---------- FOLLOW-UP ----------

QUESTION: The situation is like this:

I have issued an invoice under Income-Events Fee amount of $500 to Company A and allocated "receive payment" to that invoice.

The boss has decided to reduce the cost of the events to $300 and all customers that have paid us the $500 earlier should be reimburse back $200 each.

What is the entries for this - to refund them back the $200 fund?

Answer
The easiest method would be to
write a check to the customer and
post that check to Events Income .

But that will not show the whole story in the customer record.


To show the whole story in the customer record:

1. Create a credit memo for $200 to each customer and use the same item as
 on the original invoice.
2. Write a check payable to the customer,  and post that check to accounts receivable
(if your software will allow that type of transaction)

If you software does not allow that
 be a 2 step process:

2.  Create a Journal entry ( for the same amount as the credit memo $200)
Debit Accounts Receivable
Credit Transfer account (this can be an other current asset account)


3. Write a check payable to the customer and post to the transfer account
 in the memo line reference refund of overpayment


And finally you will need to set the credit memos against the journal entry or check


Linda Saltz, CPA

Quicken & Other Budget/Accounting Software

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Linda Saltz, CPA, QBalance.com

Expertise

QuickBooks best practices, troubleshooting, accounting, tax We have over 70 pages of website content about QuickBooks tips, running a business, tax and business startup at http://www.qbalance.com

Experience

Accountant and CPA over 20 years. Specializing in accounting software for over 12 years, Certified QuickBooks Pro Advisor, QuickBooks seminar instructor since 1997.
Producer of www.QBalance.com over 100 pages devoted to QuickBooks help and support and training for small business owners in tax and accounting issues.

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