How Do I Categorize a Return in QuickBooks Online?

You've mastered how to categorize a purchase or expense in QuickBooks Online. But what happens when you return something you purchased or got either a full or partial return? You categorize that transaction with the return to the same category that you originally categorized the purchase.

In the example in the above video, the original transaction was a $1200 backhoe rental. We categorized that to Equipment Rental. Then there was a $200 refund of the deposit when we returned the backhoe back to A1 Rental. Since we had originally categorized the entire $1200 to Equipment Rental, we will categorize the $200 deposit to Equipment Rental.

The initial rental and subsequent return of the equipment back to A1 Rental was as if you spent $1000 to rent the backhoe. You paid $1200 and got $200 back after you brought it back to the rental place. By categorizing $1200 and the $200 return to Equipment Rental, your net result of that will show Equipment Rental as $1000 spent.

[MsLoopyLoop]

Great video. Straight to the point. New follower. Thank you!

[brehnduhh]

Thank you for this video!! Would we now have to attach the new receipt for the return? I tried to upload the new receipt but it says it's a duplicate.

[dianahernandez]

Thank you. Thats exacly what I need quick and simple. :)

[michelzeitoune]

Thank you for the video! Does it work as a business expense only? I made an inventory purchase and was issued days later a full refund. When I tried to record the return as Inventory, QBO tells me "Select a non-inventory account for your deposit". Should I just match both as a business expense?

[rollerblading]

Good video showing the process, but I think what people are trying to understand is how you set up the sub-accounts you casually glossed over.
Is it the same (account type) and (detail type) as the original Equipment rental account in your case?
Thanks

[jonjonEZmusic]

i saw a video where they said to do a vendor credit and then a bank deposit? is that necessary? the guy is also saying that you dont want it to show as income... does your method solve that?
thanks!

[TellYouWhy]

Hello. Can you categorize books by beshy?

[waguerra]

Hi there! I have a similar situation here but wanted to make sure I'm doing the correct thing. I have a small biz and sometime I buy my supplies from Walmart using the Business Debit Card (In QBO I categorize this purchase under Supplies and Materials). Then after a while, I had to return some of the supplies and they gave me a refund, this refund went directly to the same business checking account (Debit Card). How do I categorize this refund in QBO? Does it goes to the same category "Supplies and Materials" ?

Your help is appreciated. Thank you!

[Marlonorellana]

wont that count as income though? I dont want to pay tax on that if i didnt even make that money you know?

[katycasper]

Since the returned amount is showing up as an added amount instead of subtracted amount, QB is not giving me the same category options. In other words, I cannot get any expense categories to show up...