How to Enter a Credit Card Refund in QuickBooks Online
Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.
This article is part of a larger series on Accounting Software.
In this tutorial, we’ll show you how to enter a credit card refund in QuickBooks Online. When you pay a vendor with a credit card and that charge is eventually reversed or reduced, you’ll need to reduce your credit card balance by the vendor credit.
Thank you for taking the time to learn QuickBooks Online, our best overall pick for small business accounting software. To get the most benefit from this tutorial, we suggest you follow along in your own QuickBooks Online account. New subscribers can choose from a 30-day free trial or 50% off for three months.
This tutorial is one of our Free QuickBooks Tutorials. There are multiple ways of entering QuickBooks credit card refunds, and the video and step-by-step instructions that follow offer different alternatives. We suggest you study both the video and step-by-step instructions to decide which works best for you.
When to Enter a QuickBooks Credit Card Refund
After you purchase items using your credit card, you may need to return something because it was damaged or you didn’t need it. The vendor will usually process the return using the same credit card that you used to make the purchase. This refund will appear on your credit card statement as a reduction in your balance. You need to enter this refund so that your QuickBooks credit card balance is correct.
Don’t change the original charge: Resist the temptation to record the refund by changing or deleting the original credit card charge. Doing so will make reconciling your credit card more difficult and will misstate your financial information if the charge and refund are in different accounting periods.
How Do I Enter a Credit Card Refund in QuickBooks?
There are four basic steps to enter a credit card refund in QuickBooks Online:
- Click on the New button at the top of the left menu bar.
- Select Credit card credit in the Vendors column.
- Input the credit transaction information.
- Click Save and close.
Let’s take a more detailed look at how to enter QuickBooks credit card credits.
1. Navigate to the Credit Card Credit Screen
From the QuickBooks Online dashboard, click on the New button at the top of the left menu bar and then select Credit Card Credit in the second column under Vendors:
Create a New Credit Card Credit in QuickBooks Online.
2. Input the Transaction Information
The Credit Card Credit screen is nearly identical to the Expense screen you use to input credit card transactions manually:
Enter a Credit Card Credit Transaction in QuickBooks Online.
A. Payee: Select the vendor issuing a credit to your credit card.
B. Bank/credit account: Choose the credit card account on which the credit is issued.
C. Payment date: Enter the date the credit was issued, not the date of the original charge.
Review the original credit card charge: It will be very helpful to review the original expense entry as this credit entry should use the same categories and items for the portion of the expense refunded. The process for reviewing a credit card charge is the same as reviewing a credit card credit discussed at the end of this tutorial.
D. Category details: Refer to the original credit card expense entry to determine which category should be reduced by the credit.
E. Item details: Use the same items as were on the original credit card expense. If the credit is because you are returning inventory items purchased, be sure to include the number of items returned in the QTY field so that your units of inventory owned is reduced.
When you have entered the credit information so that it reverses the appropriate portions of the original expense, click the green Save and close button in the bottom-right corner of the screen.
Reviewing and Editing Credit Card Charges and Credits in QuickBooks Online
After a credit card credit has been entered, it should appear in the credit card register. The following steps will show you how to find the credit in the register, review the details, and make any needed adjustments.
1. Navigate to the Credit Card Register
Hover your mouse over Accounting in the left menu bar and then select Chart of Accounts from the pop-up menu:
Go to the Chart of Accounts in QuickBooks Online.
Scroll through the Chart of Accounts to find the credit card account you want to review. Then, click View register in the last column for that account:
View Credit Card Register in QuickBooks Online.
2. Select a Credit Card Transaction
From the credit card register, find the credit card charge or credit you want to review and click anywhere on the transaction to open more detail:
Edit a Credit Card Transaction in the Credit Card Register.
I recommend making any necessary corrections on the original input screen, which you can open by clicking the Edit button under the transaction. When you are satisfied with your review or corrections, click Save.
Wrap Up
You’ve finished another of our QuickBooks tutorials and can now enter credits issued to your credit card account. If you’re completing our tutorials in order, you’ve probably noticed the tutorial are getting quicker as you get comfortable with QuickBooks and how transactions are laid out. If you haven’t completed our previous tutorials, you can view our entire tutorial by clicking the link below. The next tutorial in our QuickBooks Online Training Course is How to Reconcile a Credit Card Account.
