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.
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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. Although the video was made with a slightly older version of QuickBooks Online, 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.
Kaliana Johnston
Hello Crystalynn. Thank you so much for your videos. This process doesn’t seem to change the suppliers totals, only the ledger account (advertising) and Credit Card register record the change. Is there another way to enter this so that it records the reduction of the total amount spent with the Supplier as well? Thank you 🙂
Crystalynn Shelton
Hey Kaliana!
So glad you like our QuickBooks video tutorials! The process outlined in this video tutorial should also take care of the balance due to the supplier. Did you select the supplier in the appropriate place? Per the screenshot, item #4 (Payee) should be the supplier that you received the credit from. Double check that to make sure it is not blank.
Best-
Crystalynn Shelton, CPA
patti
I recently cashed in my CC rewards, so it was shown as a credit on my statement. When I entered it in CC transactions as a refund, it created a dual charge in the Charges/Cash advance as well as payments/credits in the reconciliation function. How should I enter a cash back transaction so that it only shows on one side of the ledger for reconciliation? Thanks for the tutorials!
Patti
Crystalynn Shelton
Hi Patti, so glad you like the tutorials! This transaction should have been entered into the credit card register using the CC Credit transaction type (not refund). Since the credit reduced your total credit card balance you do have to offset that to an income account. I generally would set up a miscellaneous or other income account for this.
As far as the credit card reconciliation, it should appear on there since it will show up on your credit card statement.
Thanks for reading and watching the QuickBooks Tutorials!
Crystalynn
Hugh
Thank you, Crystalynn! I never knew that CC Credit option even existed. Very helpful.
Crystalynn Shelton
Hi Hugh, you are very welcome! So glad you liked the video tutorial.
All the Best-
Crystalynn