In this tutorial, Linda Artesani of Artesani Bookkeeping demonstrates how to properly record a vendor refund in QuickBooks Online. She explains that when a vendor refunds money—whether from a returned purchase paid by debit card or an insurance overpayment audit—the refund should be entered as a bank deposit, not as income. The deposit is then coded to the original expense account (e.g., Repairs & Maintenance for a Home Depot purchase or Workers' Comp Insurance) so the expense is reduced rather than inflating revenue. Using a sample QBO file, she walks through selecting the vendor, entering the deposit amount, assigning the appropriate expense account, and verifying that the transaction appears as a deposit in the bank register while offsetting the original expense. The tutorial emphasizes the importance of correct classification to maintain accurate financial statements and invites viewers to ask further questions via Facebook or her blog.
Chapters
Hello, Linda Artesani, Artesani Bookkeeping. I wanted just to do a short tutorial on how to record a refund from a vendor. For example, say you paid a vendor with a debit card and they refunded you, you returned the goods that you purchased. Or perhaps in another scenario, you pay for your insurance all year, your workers' comp insurance, and then you Have an audit and the auditor comes in and looks at your payroll numbers to see if you guessed well for your figures for the year, and they find that you maybe had less payroll than you actually had, and then they refund you because they've then now overcharged you. So how would you record either one of those transactions in QuickBooks? I'm going to come over to my sample file. I'm going to pretend that we received some goods and we're going to return, get the return. So I bought 10 widgets, I returned 5 of them, and I got a deposit back for $50 from my vendor. So I would come over to the plus sign and come over to bank deposit. So you're going to be putting the money back in. So when you have a debit transaction, it's like a check, you take it out. You can use expense as well. And if you have a refund, and it can be in your PayPal account, it can be in your Bank account, for example, we'll use the bank account here. Let's just say you got refunded for your widgets. So I'm going to grab one of my vendors as an example here to find one that I'm going to get. Did I go the wrong way, Kristin? No. Oh, it's going to want a customer. So let's just do Home Depot for the vendor. It's going to want a customer because obviously you think deposits, it's usually your customers giving you money. And then I'm going to write here, it's repairs and maintenance for my account when I purchase anything from Home Depot. I need work around my shop or my office, I spend it there. So I bought some boxes of nails or something like that, and I took— bought 10, but I didn't need 10, I only needed 5. So I returned— I got a return for 5. And since I used my debit card, they refunded my debit card, and that would make a deposit in my bank account. So I'm going to say I returned— $5. Boxes of nails refunded by Home Depot. So you're going to get this oddball deposit that you're going to be like, well, how do I put this in my bank account? And I'm just going to say it was— there was 10 of them, but 5 of them at $10 each, so $50. And I'm going to put them back into my bank account. So now it's going to show as a deposit, but it's not a deposit from my customer. It's going to show as a deposit from Home Depot as a deposit from Home Depot that I got refunded this money. So let's see, I'm on PayPal. Let me go back here to Bank of America and it should show my deposit. And there's my deposit for $50. So I'm going to have $50 more in my bank account because I returned these items. And you'll be able to see the corresponding transaction of the purchase of the 10 boxes In the repairs and maintenance category. So maybe I bought 10 boxes at $10 each, it was $100, and I returned 5, so that's $50 back. So I'll see the $100 going in as my expense, $50 coming off the expense, so my net expense was $50. Same thing for the insurance. So let's come back here, and I'm going to say that the Hartford Insurance Company refunded me the money for overpaying my Insurance for the year, my workers' comp. So I'm going to come over here and just make a deposit, and I'm getting refunded for my insurance expense, so I want to offset my insurance expense. So I'm going to come over here and write Hartford. Let's see if I've got Hartford. I'm trying to remember what I have in here. Hartford Insurance, yay! And then I'm just going to put it in the insurance expense because this particular sample file doesn't have it, and it's going to refund for overpayment. Of insurance for, you know, I can put period 2016 because usually you're audited later. And that way I have some notes from my accountant. And then whatever the refund check was, you can put it in here. And the same thing, that's going to show in my register under my bank account that I've got now a deposit, but it's not income, right? This is the most important part of this whole thing is it's not income. It's reducing my expense of the insurance. So hopefully that explains it pretty well for you. If you have any more questions or would like future videos, please feel free to log on and go onto my Facebook page. I'll have this posted on my blog, so there'll be a link to get back there. I hope that was helpful. If you have any more questions, feel free to reach out. Thank you so much. Again, Linda Artesani, Artesani Bookkeeping. Bye now.
