How to record a supplier refund in QuickBooks

Look up the original purchase and see how it was recorded, because that decides the method. Intuit's three cases are an expense or cheque, a bill you've already paid, and a purchase refunded to a credit card. If you can't tell which applies, check with your accountant.

This page is for money the supplier actually returns. If they've given you a credit to use against a bill you still owe, apply the supplier credit in Pay bills instead.

Know where the money landed. Two of the methods use a bank deposit, and each bank deposit is a separate record in QuickBooks, so Intuit's advice is to enter them one at a time, one for each deposit slip.

These steps are for a refund cheque on a bill you've already paid.

1. Select + New or + Create, then choose Supplier credit.
2. Choose the supplier from the Supplier dropdown, enter the Category details or Item details to match the original bill, and select Save and close.
3. Select + New or + Create again, and this time choose Bank deposit.
4. From the Account dropdown, choose the account the refund cheque is being paid into.
5. In the Add funds to this deposit section, choose the supplier under Received From.
6. In the Account field on that line, select Accounts Payable (A/P). Intuit's method needs this account so the deposit can be linked to the supplier credit.
7. Enter the Payment Method, such as Cheque, and the refund Amount, then select Save and close.
8. Select + New or + Create once more and choose Pay bills.
9. Tick the bank deposit you've just made.
10. Check that Credit Applied equals the deposit amount and the Total Payment Amount is zero, then select Save and close.

If the purchase was entered as an expense or cheque, one bank deposit does it. Select + New or + Create, choose Bank deposit and pick the account from the Account dropdown. In the Add funds to this deposit section, choose the supplier under Received From, select the same Account the original expense used, and enter the Amount. To link it to a customer or project, tick Track returns for customers and choose them. Then select Save and close.

For a paid bill, linking the deposit in Pay bills sets the supplier credit against it, and no money goes out because the payment total is zero. The refund shows as money in the account you deposited it to.

For an expense or cheque, the deposit adds the refund to the account you chose and records it against the same account as the original expense. A credit card credit puts the refund on the card account you picked, under the original expense's category.

To see your deposits afterwards, go to Reports, select Standard reports and run Deposit Detail, which lists every completed bank deposit. A deposit entered by mistake can be deleted: go to All apps, select Accounting, then Chart of accounts, open Account history for the bank account it went into, find the deposit, select Delete and confirm with Yes.

If the deposit won't link to the supplier credit in Pay bills, open it and check the line's Account. Intuit says the deposit only links to the supplier credit when that account is Accounts Payable (A/P).

Banked the refund together with other money? On the bank deposit, tick the other payments in the Select the payments included in this deposit section, and make sure the total matches your deposit slip.