 QuickBooks Online 2024 refund first a word from our sponsor. Yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our trust me I'm an accountant product line yeah it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions if you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com receipt form get ready and pack some trail mix because we're hiking on QuickBooks Online our audit trail to success here we are online in our browser searching for QuickBooks Online test drive looking for the result that has into it.com and the url into it being the owner of QuickBooks selecting the United States version of the software and verifying that we're not a robot opening up our reports like we do every time reports on the left hand side right clicking on the balance sheet and open link in new tab I'm going to right click on the profit and loss and then open link in new tab the new tabs are up top closing the hamburger there's our balance sheet tabbing to the right closing the hamburger there's our profit and loss tab back to the left that's the setup process we do every time data input on the left hand tab checking the results on the financial statements to the tabs to the right selecting the drop down we've been looking at the customer cycle noting that we could have an easier or more difficult customer cycle the easiest cycle being one possibly where we're reliant on the bank feeds using the deposit form to record revenue slightly more complicated would be a system where we have a cash register sales receipts then being recorded at the point of sales followed by deposit forms and then reconciled with bank feeds and or bank reconciliations and a cruel method where we have an invoice increase in accounts receivable receiving the payment and then recording the deposit followed by the matching to the bank reconciliation or the bank feeds so we've been looking then at the credit memo form we took a look at in a prior presentation we're going to look at a similar type of process but has a distinct difference that being the refund our receipt form so to think about the differences let's go on over to a flowchart just to give a quick look this is a quick books desktop flowchart but we're just looking at the flow of the forms which will in essence be the same for any accounting type process so if you had a full service a cruel accounting system and we invoiced somebody then that's going to record accounts receivable increasing and revenue if we have not yet received a payment from them and they returned the goods that's when we might have the credit memo involved the credit memo in essence reversing the invoice we saw how we can tweak it a little bit possibly to record allowance or for sales returns or possibly record something to bad debt if we need to increase the accounts receipt or decrease the accounts receivable for items that we're not going to be collecting on or possibly take it to an allowance account all of those have to do with the accounts receivable that we need to decrease even though we have not yet received a payment but what if we have received a payment we've got a payment already and we've made the deposit already and then they come back and say I'm going to return this piece of merchandise well at that point we have to say if we're going to give them a refund then they've already paid us so we don't we're not going to decrease the accounts receivable and said we'd have to actually issue them a check and if we're going to issue them a check then you would think we would just write a check or use an expense form but if we use an expense form then we can't really see that that would be when we write a check what happens is that comes out of the vendor side of things that would be part of the vendor cycle and we're writing a check as a as a a return here so we want it to be linked to the customer side so when I look in the customer center I can see what happened I can track and see what happens so that's one reason that we want to use a refund receipt form possibly in that situation also if they returned inventory then we have to deal with the return of inventory and the refund receipt form will reverse that inventory transaction that we're now receiving in a similar way as we saw with the credit memo so now we're imagining a situation where we either issued an invoice or we could have the sales receipt which would both put us in the same situation imagine someone ordered something and then they paid it or they went into a store and they purchased it at the cash register so we use the sales receipt form in both cases they've already paid us and so now if we're going to reverse that transaction that means we're going to issue them money possibly in which case we don't want to use a check because they're a customer and therefore we're going to use this refund receipt which is kind of like a type of check so let's do the full process again let's make an invoice and we'll then imagine this whole system again so we'll do this fairly quick because I know we've done this a few times on the invoice side at least customer number one I'm going to add the customer boom we're going to say this happens on 010124 and I'm going to call this item number one item number one tab and we'll add an inventory item item number one and we're going to say that that's going to be a description item one let's say we sell it for 160 this time and cost is going to be 100 so we should have a $60 profit this time on the sale it will be subject to sales tax just to make it a little bit more complex let's save it and close it we have to put some on hand I'll say 10 on hand QuickBooks will make a journal entry for the purchase as of we'll say the 1st of December 2023 because we want to focus on the sales side the invoice side here so let's save it and close it and so there's what we sold what's this going to do let's map it out over here in excel so I'm going to say excel what's going to happen it's an invoice it's going to increase the accounts receivable and it's going to increase our revenue account which I'm going to call income in our worksheet here we're selling it for 160 credit 160 the sales tax is going to increase which I think is 8% so it's going to be equals this times 0.08 or 8% therefore the AR negative sum plug of 172 so there's the 172 that we're going to collect and then we also going to have the inventory which is going to go down uh so cost to get sold is going to be debited and inventory is going to go down and that was for 100 100 so accounts receivables going to go up we're going to have inventory goes down and we're going to have the sales uh tax is going to be uh hold on a second wait a second we're going to have income is going to go up the difference between those two is sales tax and then inventory is going to go down and cost of goods sold is going to go up the impact on the income statement is $60 the income minus the cost of goods sold $60 sales tax will be pay about payable in the future off the income statement on the balance sheet inventory went down accounts receivable went up let's check it out this way let's save it and close it go to the balance sheet and run it and take a look at the AR accounts receivable closing this out oh hold on back let's change the range 01012 I don't want to give a review 01012 I'm trying to do something here 12 3124 stop doing that bugging me all right it didn't record let's run it again and we're going into the accounts receivable and there it is okay that's for the full amount if I go into the profit and loss and run it here 010124 tap 12 12 3124 run it so there we have the 160 that's just what we sold it for not including the sales tax the sales tax is going to be over here in uh the board of equalization there's the sales tax and we have the inventory that's going to go down inventory is being decreased and we have the cost of goods sold over here which is going up by the 100 the difference between the 160 the 100 is $60 and on the balance sheet we can track the sub ledger of of accounts receivable go into the tab to the right right clicking duplicating going to the reports on the left hand side and down to who owes you we're on the customer balance detail let's say and we have the customer there it is the total of this report 602432 ties out to the balance sheet 602 uh words 5 4 hold on hold on the total is 545432 so over here 545432 and then the the inventory is also necessary to track on a sub ledger right click in the tab to the right one more sub ledger to check out this whole invoice process reports typing in inventory valuation summary closing the hamburger range change 123124 run it so there we put nine on there we sold one nine remaining total 149625 tying out over here 149625 okay let's say that they paid us now so let's go internally sales side customers hamburger close customer number one we're going to receive the payment let's go let's go into the customer and then receive the payment so i'm going to go in here and then say receive the payment customer number one let's say this happens in february so 2124 payment let's just say it's going to be cash and it's going to go into i'm just going to well it doesn't matter whether it goes into undeposted or the checking account let's just put it into the checking account for our purposes here the point is they already paid us so this is going to be then decreasing the accounts receivable and going into the checking account so if i recorded that over here we're going to say now we've got paid receive payment receive payment is going to be cash is going to be going up and the other side is going to be going out of ar for the amount of 17280 so cash going up 17280 and accounts receivable going down by 17280 but we also need to track it in that sub ledger right that's going to be the key so i'm going to say save it and close it and so there there we have that if i go to the balance sheet and run it we're going to say okay in the accounts receivable account it went up went back down back it went into the checking account and it went into the checking account here no impact on the income statement from that transaction and the ar sub ledger should go back down if i go into the internal report we can see here that the invoice has been paid so now the customer comes back and says okay look i want to return this item well they've already paid us this time so i can't issue the credit memo right i can't so easily go credit memo they've already paid us credit memo decreases the accounts receivable instead we might go to so you might say well i can just pay them a check well we'll just give you a check don't give us a bad yelp review we'll write you a check but the check is out of the vendor side of things so i don't want to write them a check for 17280 because i won't be able to track it in my vendor center i mean in my customer center uh here it'll be on the vendor side so and i won't be able to deal with the inventory if they're returning inventory so instead we're going to go to the sales receipt so let's make a sales receipt uh hold on a sec is that right that's not right one of my what did i just say instead we're going to go to a refund receipt refund receipt big difference all right so this is going to be customer number one and we'll just mirror what we did before i probably should have opened the other forms as a best practice so i can have it side by side but we'll say this happened on the third and let's say that uh this is going to be a refund receipt we're going to say it's going to be a check and we're going to say it was for item number one so i'm just mirroring the exact same thing uh we did before and so we have the same 172 so let's say this happened in a different period i'm going to copy this over to here and then i'm going to do the same thing we did before i'm going to copy this side and paste it what paste it 123 over here remove this and then change my equity to negative 30060 and so so now i'm just going to reverse what we did before exactly so this is except i'll have so this is a refund receipt so what's the refund receipt going to do well i could say it's going to reverse exactly what we had before except we already got paid on this accounts receivable so this so so i can do what we did before in the credit memo i just reverse everything like so but here we already got paid so i'm going to change this instead to cash so that might be the easiest way to kind of think about what is happening on this refund receipt it's like a credit memo except instead of instead of reversing the accounts receivable you've already paid them so it's basically like writing a check but you might also have to deal with you know this and then we also have the income account with the same issue we had before that we might not want to reverse the income state account but rather put it into sales returns and allowances so let's first do it this way what would happen cash is going to go down now income this is income is going to go down with a debit and then the sales tax is going to be reversed and then cost of goods sold is also going to go down so the net impact is 60 on the negative side and the inventory is going to go back up assuming that they returned inventory that we're now going to put an inventory again if not then we wouldn't reverse this part because we didn't get the inventory back or the inventory is defective also i'm going to be taking this out of the checking account so it's coming out of the checking account if it was a check number or if it was a check that was being written we would need the number here if it's an electronic transfer then possibly we remove this so it will be similar to an expense form as opposed to like a check form because this will be kind of like a check form or expense form decrease in the checking account so then we can save and close it jump on over to the balance sheet and then on the balance sheet we're going to run the report go into the checking account so it should be a decrease to the checking account so here it is but notice it's a refund form so now we have a decrease a refund form instead of an expense form or a check type of form so there it is if i close this back out and then go back the other side is on the income statement let's run the income statement side by side month by month this time so we'll run it by months so you can see then there's the what happened in january there's the reversal that we put in march so then if i go back to the first tab the difference between those two is in the sales tax so if i go down to sales tax we can see that we have that has been reversed that looks good and then we can see that the inventory if i go into the inventory it has been put back on the books so we increase the inventory because we assume that they gave it back to us and then the other side is going to the income statement right here so the difference is $60 right so we had a 60 negative versus the 60 positive on the sales side because we basically reversed it and issued the check since we already received the money now we have the same issue with this sales though sometimes we don't like the sales directly decreasing right we only want sales to go up in any returns to go into sales returns and allowances and you might have a system where you didn't get the inventory back maybe and you don't want to increase inventory with it but you still want to issue a check not with a check form but rather the refund because you want to be able to track it internally as you can see here where it nicely tracks internally like with the credit memo where we have the invoice and the invoice shows as being paid it shows as being paid and then we can see the refund all on the customer side of things otherwise it wouldn't be in here it would be in the vendor side of things and if they if someone called in and we have another issue with it people wouldn't be able to see it on this side of things they'd have to go to the vendor and find whoever we wrote the check to so let's do another one this time we'll start instead of with an invoice and then receive in the payment let's imagine we sold it at a cash register and go directly to the sales receipt so we're on the sales side someone came into the store customer number two and we're selling something to them so we're gonna say all right and let's say this happened on 050124 and tab tab and the payment method let's say is cash and it's gonna go directly into the checking account we're just gonna put it into the checking account for this particular purpose which means it probably should have been a check so then it goes directly and we have a check number directly the check number all right so then we're gonna say it's item number one item number one again and so now we're gonna say that that we sold one of them so same same transaction as we did before except now instead of an invoice it's a sales receipt so what's gonna happen we're gonna have cash go up by 17280 instead of accounts receivable the other side going to revenue 160 sales tax payable going up by 1280 the inventory going down by the 100 not on the form but driven by the item cost of goods sold going up by 100 impact on net income sales price 160 minus 100 or 60 dollars and the sub ledger for inventory will also be impacted for the item that is sold so let's go ahead and save and close it and then go to the balance sheet and check it out run in the balance sheet so we can see in the checking account we've got an increase again of this time the sales receipt as opposed to the payment on the invoice and then the other sides go into the revenue account so if I go to my income statement there's the 160 and then the other the difference between those two is going to sales tax into sales tax so here's the sales tax again on the sales receipt this time and then the cost of goods sold is going to be here and the inventory is impacted here so if I go to the inventory boom so inventory sales receipts going back down and the sub ledger for inventory once again is back down to nine because we sold that item this 1496 25 tying out to what's on the balance sheet 1496 25 so now let's go into it internally go into the sales side customers closing the hand boogie and then go into the customers so there we have it so it's been paid now they return it so we're like okay they've returned it but they've already paid it so we can issue them a check for 172 I could say I'm just going to go issue you a check but that's in the vendor center that'll mess us up so we don't want to do that we instead are going to go into the refund receipt refund receipt form and so this is going to be for customer number two and let's say we issued the refund on 6124 and the payment method let's say was cash let's say and then we're going to say it's coming out of the checking account let's say it's a check it's a check it's coming out of the checking account but I'll delete the number because it's like an expense form and then we're going to say it's for item item number one boom so here's the same amount 172 80 but we don't want it to go to the income account to reverse income I wanted to go to sales returns and allowances so I'm going to do the same trick we did before with the credit memo I'm going to make a new item sales returns and I'll add that's not an and and allowances ah I thought I had it I can't I give up the spelling bee I'll sit down just like I did in grade school the first time I had to spell something I'll just sit just I'll just sit down right just let me sit down from the start let's just okay this is going to be uh let's say and this is going to go into a new one and it's going to be an income type of account we'll say it's a contra income account and we'll say other income sales returns and allowances so I'm going to save it and close it and I'm not going to do well we'll keep the tax on it and save and close okay okay so then I'm just going to mirror the dollar amount 160 and then delete it from up top now why why do this because because I get to the same dollar amount down below 172 80 but this one is now going to be recording it to the proper income account which is the contra income account of sales returns and allowances whereas this one still does some work because it's tied to the inventory item because when they returned it they gave us the inventory back so we want to increase the inventory that we have received now note that if we didn't get the inventory back or it's defective it's broken maybe we just delete this line item all together and then we won't record the second part of the journal entry where we get the inventory that would be like we don't record this bit because we didn't get the inventory back or maybe you record the inventory that we returned and then write it off as damaged or something like that if that's how if that how it how it works depends on what your system is but there it is so let's go ahead and save that we should have a similar reversal process save and close refund successfully issued so then I can see it in here and I could see it on the sales side of things instead of the vendor side of things where we have we have the refund the sales receipt and then the refund so I can see those two kind of linked up or that they most likely are together so if the customer calls has a question we can see what it what's going on so if I go into the checking account on the balance sheet we uh uh hold on a second why is there so much stuff in here that's 2023 run it to refresh it let's go in there again there it is so we got our refunds so that looks right let's go back on over let's go to the income statement run it here's where the change happened so instead of reversing it to a negative into to a negative income here was the income then we reversed it to another account sales returns and allowances so that we have we can see the increase and the decrease related to the returns instead of decreasing our sales account which we don't typically like to do the cost of goods sold also impacted so there's the increase of the 60 and then we decreased it in the following month of the 60 on the other side of things we can see that the sales tax is going to be impacted here sales tax and if we go into that increase and decrease goes back down inventory account will be impacted let's go into it and we can see the inventory account has been increased and decreased back down and then or decreased and increased and then we can see in the sub ledger that the sub ledger now we're back up to 10 items because it was returned we're now at the 159 625 which should tie out to what's on our balance sheet over here 159 625 so bottom line if if you have someone wants to return someone something on the customer side and and there's an AR issue then you're dealing with credit memos most likely but if they already paid you either through an invoice and then they receive the payment or from the sales receipt sale at a cash register then you possibly want to be using the refund receipt as opposed to the credit memo and as opposed to issuing them simply a check or a expense form so that you can properly account for things within the customer register instead of the vendor register and deal with inventory if inventory is involved