Quicken & Other Budget/Accounting Software/Illegal ChargeBack Balance Still Due

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Question
Good Morning,

FYI
I am running QB enterprise Pro 12.0
I don't use QB merchant but rather a third party, entering the payments as the card type and noting the auth codes for the transaction.

I have a customer that paid for an invoice with a credit card.  The invoice was valid and the card was not stolen, however he used his wife's business card to pay as his was at the limit for the month.  Three weeks later the wife said it was fraud and caused a charge back to our account.  The husband and companies account person informed her the charge was valid the day it occurred and again when the charge back occurred however she still did not reverse it because she too had used her limit and did not want to go over by reversing the charge back (that alone is erking me... and btw FRAUD but never mind that)   

Now we have refused to take credit cards from this customer and required they pay via check.  I did receive payment now a second time for the same invoice via check so the invoice was paid but now I have the issue of the first payment via credit card (which I left in qb's and simply un-applied them until I figured out the correct way), the withdrawal from our bank account due to the charge back and the actual second payment via check (which I have applied to the invoice).  

Normally the charge back situations are that you never get the money and write off as bad debt. Since this was not my case I am having difficulty figuring out how to account for all, with out deleting any transactions as I want the proper trail of what occurred.

I hope you have all the details needed to answer my questions.
Any help/direction you can supply would be greatly appreciated.

Thank you

Answer
Hi Jane,
Here is a step by step to clear up this mess. (By the way, go ahead and reapply the initial payment to the invoice) You will see why once you walk through the entries.

To reverse the credit card charge, write a Check from the checking account that the money was withdrawn from, the payee would actually be the credit card merchant
The expense account is accounts receivable, and the customer is the customers name (note in the memo that it was a credit card charge back
One caveat on this, if the credit card merchant did the reversal by NOT paying you for other charges, it will be a little different. You will have to do the reversal on the deposit that it was withheld from and not a check. This gets a little bit hairy if it turns out that they took some (but not all of the reversal (IE  the reversal was 1000, you had 500 in new charges, they just withdrew the difference of 500)IF this is true, let me know and I will give additional step by step directions.

Once the reversal has been entered, Go to the check that they paid with and apply to the charge from the checking account (it is NOT additional income so you don't want to enter it that way) They owed you the money, the payment just didn't go through.
One caveat on this, if the credit card merchant did the reversal by NOT paying you for other charges, it will be a little different. You will have to do the reversal on the deposit that it was withheld from and not a check.
Hope this helps
Karin

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Karin Hostetler

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I am a certifed member of QuickBooks® Professional Advisor group and can answer questions on Quickbooks® Basic and Pro, all versions through 2011. I do onsite, telephone and online consulting through my website at: http://www.karinhconsulting.com Have a complicated issue that you can't put into one question? Consider a one time FREE 60 minute phone consultation. (724) 557-4652

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I have worked with Quickbooks® since version 1, and have had a tip published on the Intuit website. I work exclusively with small business owners in setting up Quickbooks®, giving on-going support to tweak the reports, resolving data issues and correcting problems. I offer monthly, quarterly and yearly tune-ups to prepare the clients data for presentation to their CPA at year end.

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I have a degree in Administration and Management with 20 years of hands on business experience in many fields

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