Refunding Customer Payment Shortcut
Posted June 08, 2019
If you do not need to print a check to the customer for the refund, then you can use this shortcut instead of the full Refunding Customer process. Example: You refund back to the customer's credit card or bank account through a payment processor.
1. Recording Customer Credit to acknowledge a credit balance.
- This Customer Credit credits AR and Debit “Refund Allowance” Note: “Refund Allowance” is a contra revenue account. Note: Whether you specify the original Revenue account of the Refund Allowance account is based on your accounting practices.
- This Credit is used to establish a balance to refund. Note: If you already have a Customer Receipt with the unallocated amount to refund, then do not create a separate Credit. Note: Voiding an invoice reverses both AR and Revenue for the invoice, and any associated receipts become unallocated. In this case, do not create a separate credit.
2. Recording Refund Customer Invoice to offset the credit balance
- The Customer Invoice debits AR and Credit Cash
3. Allocating Customer Credit from step 1 to Refund Customer Invoice from step 2.
In this case, there are no changes to Accounts Payable, and you do not reference the “Refunds Payable” liability account.
|
|
Cash
|
AR
|
Revenue
|
| Initial Customer Invoice
|
|
+AR
|
+Revenue
|
| Initial Customer Receipt
|
+Cash
|
-AR
|
|
| Refund - Customer Credit
|
|
-AR
|
-Revenue (or Refund Allowance)
|
| Refund - Customer Invoice
|
-Cash
|
+AR
|
|
| Total
|
0
|
0
|
0
|
Related articles
More from the Knowledge Base
Still have questions?
Live chat is staffed weekdays 8 am to 7 pm ET. Tickets get a response within one business day.
New to PCR Educator?
If you landed here from a search and want to see what PCR Educator can do, the demo is the fastest way in. Thirty minutes, no commitment.