I assessed finance charges to a customer. They have since paid off their bill, less the finance charges and I want to remove them from the customers balance. I am having a hard time grasping how to do it. I know I need to make a journal entry and credit my Finance Charges income account, but from their I am a bit confused - or maybe QB has a feature that makes this easy... I am using QB Pro 2003.
Thanks in advance Jimmy
Using a journal entry is one method. I find that journal entries are not always intuitive. For refunding finance charges it is less clear because you are trying to reduce two accounts; you are reducing the amount collected in the finance charge account, AS WELL as the amount you are collecting in accounts receivable for the customer. The office has left the house, and with it my copy of QB and whatever journal entries I've had to make in the past. I'm sorry, but I've forgotten just how to use the journal for this purpose.
I use a different method.
-- Using the item list, create an item for the finance charge. Make the item non-taxable, and have as the account the same account you specified to use in the assess finance charge window. Now, when you want to reverse a finance charge, you can use the create credit memo screen in QB to create a credit you will apply to the finance charge invoice. Open the create credit memo screen and use the item you created in the credit memo. I put a note in the description, stating that the finance charges have been reversed, and the credit will be applied to invoice # FC xxx. I also like to put a memo in the memo field at the bottom, stating simply that I've reversed finance charges previously accrued on invoice xxx (where xxx is the original unpaid invoice).
Using this method gives me a credit to match up to the finance charge invoice.
No matter the method you use, you MUST apply the credit to the finance charge invoice, using the 'make payments' screen.
Find the finance charge in the register for the customer. Right-click. Pick "Void."
Now that's simple, quick, and effective.
Simple, quick and effective...sometimes. For my particular case it does work, not really sure why I didn't think of it myself (cause I always seem to look for the hard way), however, the first suggestion definetely get put into my "how to" folder since voiding a transaction might not always work - for instance if I was big on running reports and I wanted to deal with charges that were in a previous reporting period...
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