So a reader writes in to ask if they handled a refund situation correctly. Seems like their customer issued a check for $36.00 more than the invoice; however, when the front desk customer came back into the store, the front desk issued them a refund from petty cash, but instead of refunding them the entire $36.00 they only refunded them $34.00. Our reader wanted to know if they handled the difference in the refund due and the refund paid correctly.
Let’s break down the steps they took. (Note: The readers actual data has been substituted with a similar set of facts from one of the QuickBooks sample company files.)
1) First an Invoice was issued on 12/3 for $448.80.
2) Then a payment (check) was received from the customer on 12/15 but they wrote the check for $484.80 instead of $448.80. When A/R posted this payment, they posted the difference of $36.00 as a credit to the customer’s account:
Customer Payment as first recorded
Later that same day the customer came into the business and told the front desk that he had overpaid the invoice and asked for a cash refund, the manager on the front desk didn't coordinate with the A/R clerk, and what's worse he miscalculated the refund amount and paid the customer $34.00 in cash from the petty-cash box, not the full $36.00 that was due the customer.
3) In order to correct this problem you can simply re-open the Customer Payment from the Customer Center. Now change the Overpayment section to select the option to refund the overpayment (as shown below) and then select Save & Close.
Revise the Customer Payment
4) QuickBooks will display the Issue a Refund window. Change the payment type, account and memo to reflect the true details. Note that QuickBooks will NOT allow you to change the amount of the refund on the screen, we will have to make that correction in a subsequent step. After making the changes, click OK.
Issue the Refund (screen)
5) Now open the Petty Cash check register and locate the refund which should be currently recorded as $36.00.
Open the Petty Cash Register
6) Open the Petty Cash disbursement (appears as a Write Check window).
Petty-cash Disbursement before correction
7) Change the amount of the disbursement to $34.00 (the amount of the actual cash refund paid out), insure that both the amount on the fact of the disbursement and the amount under the expense tab are identical, then click Save & Close.
Petty-cash disbursement after correction
8) Verify from the Customer Center that all transaction have posted correctly and that the client has a $2.00 credit balance for their account.
Verify Customer Center balance and entries
9) Make certain to document the transaction appropriately. (Note: you may wish to include a note in the Customer's record in addition to using the various memo fields to record the adjustments made in this case.)
Care to comment: If you would have handled this situation differently, please let us hear from you using the comment section below. After all, a big part of Intuitive Accountant is about 'sharing' information with and between our readers.