How to Create Credit Memos in QuickBooks 2019
Watch QuickBooks 2019 video tutorial. In this lesson, we will talk about creating credit memos which you will issue for a customer for various reasons such as writing off a balance on someone’s account, giving the customer a credit for something they have returned, or giving a refund.
Welcome back. We are working in module four and we’re all the way down to section seven. Today, I’m going to show you how to create credit memos.
You would use a credit memo any time you wanted to do something like, for example, someone returned something. And they want to keep a credit on their account. It could be like, in our example, our customer owed us a little bit of money and we’re going to go ahead and write that off.
There are various reasons for creating credit memos. Let me show you how that’s done in QuickBooks. Whether you’re going to actually issue a refund to a customer who’s already paid in full or issue a credit memo that stays on their account. You’re going to do it the exact same way. You’re going to use this Refunds & Credits button here.
Before we do this though, I want to look at a quick report having to do with accounts receivable so that you can see that we do have monies sitting on our customer’s account that we’re going to want to credit in this particular exercise.
I’m going to go up to Reports on the menu. And I’m going to come down to Customers & Receivables and I want to look at Open Invoices.
Now, we’re going to look at all the reports later on in module eleven but right now this would be any invoices that have not been paid. And I wanted to show you before we go on and do our credit memo that we do have these open invoices here.
Now, the one I want to show you is if you remember back in section five we talked about receiving payments. Our customer shorted us $0.04. S,o we should have an invoice where it says the customer owes $0.04.
The reason we don’t see anything here for Tom Allen, because this is only anything open as of December the 15th. If I go up and change my date to maybe the end of the month, for example, and then click to refresh the report, now, you’ll see there’s Tom Allen. Here’s the one invoice where he owes us $0.04.
We’re getting ready to create a credit memo and you will see that disappear once we do that. Let me flip back to the Home screen. And I’ll show you how to actually create that credit memo.,
You’re going to go here! Where it says Refunds & Credits. Click that. Then you’re going to pull in your customer and your job.
Now, at this point, a lot of people think that it’s going to pop up with that invoice where the customer owes $0.04 so we can check it off. But, that’s not the case because it doesn’t know what we’re trying to credit. So, we’ll see that window in a little bit.
You’re going to go ahead and make sure you have everything correct around the screen here. You want to change your date.
Let’s say that, I’m going to credit this on January the 15th. Remember, I also told you as far as the credit memo. Numbers that anything that’s numbered in QuickBooks will start with number one. But you want to change it to some other number and then it will number sequentially.
Here’s the important part. We’re going to go down to the item and decide what it is we’d like to credit.
Now, I want you to think about this. If you are refunding a customer for a physical inventory part, let’s just say a chair for example. When you actually created the invoice to sell the chair, QuickBooks took that chair out of your inventory.
If the person is returning the chair, then you’ll want to put it back in your inventory. That means you need to pick that same chair from this list. That’s really, really important as far as keeping inventory straight.
In this case, all we’re going to do is just write off some bad debt, which was the $0.04 we talked about. Now, they had bad debt already set up in this list as other charge.
We’re going to be looking at items a little bit later in module six and I’ll show you how they set this up. But for now, we’re going to ahead and choose it. We’re going to say quantity of one and we want to credit off $0.04.
It’s really important as well that where this tax column. It says, Nontaxable! Because, if it was set on Tax, then you would be actually crediting them more than $0.04. And that’s really all I want to do in this particular case.
Now, let’s see if there’s anything new up here on our tabs. We’ve got our Next and Previous and our Find like we’re familiar with. We’ve got our New option.
You’re already familiar with Save and Delete. You’re familiar with Create a Copy and Memorize, so nothing new there. Mark as Pending. You can print this if you need to for some reason.
Let me go ahead and preview and just show you currently what it’s going to look like. Notice, it says Credit Memo right here. And it does have all of the information that we had put on the credit memo.
I’m going to go ahead and close that.
You also have the ability to email this, as we’ve talked about. You can attach a file. Let me talk about these two here in a second.
Over under the formatting tab, you do have the ability to customize what the credit memo template looks like. And that’s what these are going to allow you to do, as well as this one. There’s your spellcheck!
You know how to insert a line, delete a line, and copy a line at this point as well. And then, there are some reports that you might run as far as credit memos are concerned.
Let’s go back to the main tab and I want to mention these two. The top one says, Use Credit to Give a Refund. That’s the one you would click on if you wanted to go ahead and zero out the invoice and give them a refund.
Notice, the bottom one is where you would go to use a credit to apply it to an invoice, which is what we’re going to do. But let’s say, you never saw those and you went ahead and said Save & Close down at the bottom.
It’s going to pop up and ask you, “Do you want to keep this as a credit on their account, give them a refund or apply it to an invoice?”.
I’m going to choose, Apply it to an invoice and click OK. And here’s where any invoices that are open appear. If it sees an exact match like it does here, it will automatically check it off. So, make sure you’ve got the correct one chosen.
All you have to do is click, Done at this point. And, it is now completely zeroed out! If I go back and pull up my Open Invoices again you’re going to see that Tom Allen is nowhere on this list. Because his invoice is totally paid and that’s what I wanted to show you as far as credit memos and refunds.
Let’s go ahead and move over into section eight. And I will show you how to create statements at the end of the month to send out to your customers.
Cindy McGuckin
Cindy McGuckin is an IT trainer with over 20 years of experience. Cindy currently manages the IT Training Department at Trident Technical College, she's a Member of the Association of IT Professionals, Charleston, SC chapter and the Treasurer of the South Carolina Association of Continuing Higher Education.Cindy is a Microsoft Office and QuickBooks expert and her online courses have received hundreds of 5-star reviews. Her no-nonsense approach to teaching complicated topics makes her classes engaging and interesting.
