How to Process Returns of Excess Payments

It depends on who your warranty is with, i.e. the vendor or the manufacturer. Most of the time, they will repair of replace the defective product, depending upon what the warranty states it will cover. If the vendor does refund your money, you simply debit cash and credit inventory or expense for the returned item as the case may be.

In the "Enter Bills" screen, check the box for 'credit' and enter the return. This will create a credit with the vendor.

Willy boy is back with another question.

I know how to process a credit. I asked about a return of funds. I can certainly do the direct debit as suggested by the other poster, but was curious if the involvement of Bills and POs in the original payment created any extra hurdles.

Only if you received a credit from the vendor. If you received a refund check, go to make deposits, enter the same account that you used when you paid the bill and the vendor's name. This will make the JE for you and record it to the vendor with the other transactions.

Michelle L. Long, CPA, MBA Author of: Successful QuickBooks Consulting: The Complete Guide to Starting and Growing a QuickBooks Consulting Business

I totally agree with Michelle. Not to confuse things, but if this is a trade paybles vendor that you make numerous purchases with they will nomally issue a credit, unless you request a cash refund. If the item was sold and returned by a customer, you would refund the customer by crediting cash and debiting sales. The cost of the defective item would also have to be taken into account by crediting COGS and debiting inventory/purchases. The cost amount you were refunded would then be credited to inventory/purchases for the item.