How to refund and upfront deposit

Question

I have a service business where I take an upfront deposit before starting services. I followed the 'help' in QB 2005 Pro and it said to create a Sales Receipt for the deposit amount and create an item I called 'Upfront Deposit' and charge it to an Other Liability Account I called 'Customer Deposits'. If that's not right, please let me know.

A client started service, but stopped before the entire deposit was used up. So, I created an invoice for the services rendered ($250) and tried to apply the deposit ($500) which gave me a negative balance. Quickbooks doesn't allow this. So, I created a Credit Memo for $500 and applied it to the invoice, leaving $250. However, when I print it, both of the amounts are negative! Why is that? Did I do something wrong? What do I print that I can send to the customer that will indicate to them that they are receiving a $250 check instead a negative amount?

Thanks for your help.

Tim

P.S. Be gentle with me...I'm not an accountant!

Victor Roberts · Accepted Answer

I also have a service business and received my first customer deposit just last week, so I don't know how it will work in the end. I believe that both the $500 and $250 are negative on the invoice since both represent a credit on the customer's account; one the starting credit and the other the ending credit.

The negative amount says that their account has a credit due them from you of $250.

What happens if you write a check for $250 against the credit? The final amount of the invoice should be $0. Does your check for $250 also show on the invoice?

-- Vic Roberts Replace xxx with vdr in e-mail address.

How to refund and upfront deposit

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