Vendor or Insurance Check Refund deposit QBO

Vendor or insurance check refund got you puzzled? It is one of those transactions that happens infrequently so it can really trip up a QBO (QuickBooks Online) user.  

Do you see the transaction in the deposit side of the  bank feed and wonder, "how do I code this?'  Or did you open the mail and receive a paper check, deposit it, and wonder, "how is this entered in my books?"  What income account do I use?

Well, the short answer for these types of scenarios, is that this is not an income transaction at all.  When your vendor refunds you, you are lowering the initial expense for your overpayment.  At the time of purchase, it increases your expense total (debiting your expense).  At the time of the refund, you lower that total, crediting the expense.  

Here are a few examples where this method will work for you:

  • check
    Debit Card purchase was returned
  • check
    Disputed bank fees are refunded
  • check
    Insurance audit takes place and you were overcharged for insurance for prior insurance period

So how do you enter this in QBO?

Very simply:  Click the plus sign (+) and then bank deposit.  Enter the Vendor name, the expense account you used for the purchase that is being refunded and the amount of the refund.

Below you will see a video of how to do this in the program:

Here is a link to another vendor post from my blog.  This week's post is giving me the holiday off.  I am repeating it because we had a question in our community, QB Community Live on this very topic.  I hope everyone had a wonderful holiday!

If you have any questions or would like to see a future video on another topic, please reach out to me on Facebook.

Lynda Artesani

Being in the accounting field for over 20 years, I have watched this industry evolve. It is an exciting time to be an accountant with all the changes in technology. I am honored to be on the Intuit Advisory Council 2018-2019 and to be a member of the Intuit Trainer Writer Network. I am also an Advanced Certified ProAdvisor. In addition, I am the co-founder of QB Community Live! With Matthew Fulton. It is a Facebook group where I help other accountant and small business owners. My firm specializes in working with Law Firms and with Real Estate owners and Start ups.