How to Enter a Credit Card Refund in QuickBooks Online

Cody Cromwell
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When to Enter a QuickBooks Credit Card Refund

When you give your business a credit card number, you’re giving it the power to take out money from your account and put it into the business account. This is a benefit, but it’s also a risk, so when you receive financing, you’re going to want to make it a practice to monitor your credit card account.

As a business owner, you’re also going to want to make sure you understand how to fill out a credit card refund upon return of a customer’s goods. And the last thing you want is to get a customer frustrated because you’re not savvy enough to enter a credit card refund when you need to.

How Do I Enter a Credit Card Refund in QuickBooks?

Since QuickBooks Online is meant to work with a sound business practice, providing accurate and timely accounts is required. This is accomplished by entering and reconciling your credit card transactions as well as by keeping track of inventory, sales and purchases.

It is also important to keep your records of your expenses clean. You need to know exactly how much your credit card purchases, discounts and returns are.

To provide accurate records, it is important to enter a credit card refund and charge the original credit card for the refund. This way, the charges will appear in your credit card accounts, accounts receivable and accounts payable.

When you do this, your QuickBooks account will reflect the true cost of your purchases made with a credit card. To do this, you have to set up an account receivables credit card for the type of account that you or your business use to pay for your credit card purchases. You can find more information on setting up accounts on your company’s website.

In the QuickBooks Online interface, navigate to the company menu in the top right corner of the screen. You can also find this by clicking the Company heading or by going to the top right corner of the screen and selecting the icon with the company’s letter.

Navigate to the Credit Card Credit Screen

Click on the “All Receivables” icon to open the Receivables screen. Then, select Credit Card from the dropdown box.

Next, find the credit card vendor, and you will be brought to the Credit Card Credit screen.

Click on the Credit Card Credit button.

You’ll be placed on a screen that shows an overview of the credit card invoice, including the amount, description, payment terms, and tracking number.

Select the credit card invoice you want to enter a refund for.

You can also change the payment date of the selected credit card invoice by clicking the Change Payment Date button.

Next, click Enter Refund for the credit card you want to refund for.

You will be prompted to sign into your QuickBooks Online account. Simply use your QuickBooks Online username and password to sign in. The next screen will show the credit card’s statement history, including the credit card statement period, statement date, and statement date… that’s when you need to look. The statement date is when you need to find your credit card statement.

Navigate to the Credit Card Credit Statement screen.

Select the statement you want to enter the refund.

Click on the “View Statement” button.

Input the Transaction Information

To reset your card account, first open QuickBooks Online. From the menu dashboard, click Transactions and select Credit/Debit Card. Click Convert from manual to setup the card account. On the right side of the screen, click "Add transactions" and select the type of credit card transaction.

For a refund, select a credit card charge that features a reference number. This can be found in the "source" field and is usually an eight or nine digit number. Refer to the source field. Make sure the credit card used for this transaction is the same as the credit card account currently set up in QuickBooks. To confirm this, we’ll go to the opening screen of your credit card transactions so we can search for the reference number.

Reviewing and Editing Credit Card Charges and Credits in QuickBooks Online

To enter credit card refunds in QuickBooks Online, you’ll need to first review the credit card transactions in your company file. Then, you’ll need to edit the entries to make sure each credit card charge has the correct refund amount. From there, you’ll want to print out the updated charge or credit transactions for your paper records.

Open the Transactions tab of any credit card transaction and click the Runs tab of the Income or Expense item that corresponds to each credit card charge. Look for a Credit Card item, which may be listed under Other Items or in the Ctrl + Break Category section.

If there isn’t any Credit Card item, click the Create button. In the dropdown that appears, select Credit Card and click OK. Now you’ve created a Credit Card item to track the credit card refunds.

To enter a credit card refund in QuickBooks Online, set up a Customer in the Customer Center. Add the Customer account as an expense by creating a Job, and then enter the job expense as a credit card expense (under the Expense drop-down in the top toolbar). Once it’s added, use the Customer Center to add the credit card transaction as the payment method for the job.

Navigate to the Credit Card Register

From the icon at the top of the QuickBooks Online dashboard, select the Payment method you use on most of your invoices. Then select Payment terms and enter pricing, terms, and locations. Under the Payment terms column, select Credit Card. Finally, select QuickBooks Online menu transaction menu icon and select Create Credit Card transaction.

Select a Credit Card Transaction

Before you can enter a credit card refund for a credit card transaction in QuickBooks Online, you will need to select the credit card transaction in the following screen:

In this screen, you’ll notice the first column marked –Credit Card.” Click on the arrow to expand that column and then scroll through the list of credit card transactions in the transaction window until you find the credit card you would like to refund.

For any refund transactions associated with that credit card, you’ll see a checkbox in the –Cushion Charge” column called –Cushion Charge Is Refunded.” Click on that checkbox and then proceed to the next screen to enter the amount of the refund.

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