I appreciate the detailed steps you've performed for the partial refund, Ballentine. When refunding a security deposit, you must first issue a check for the portion to be refunded and record an invoice for the remaining amount. Then, create a credit memo instead of a journal entry to correct the liability account and zero out the balance. Let me help share more details about it.
Since you issue a partial payment for the security deposit and post it to a liability account, you need to create a credit memo instead of a journal entry for the amount that is not being refunded.
To enter a credit memo for the un-refunded amount:
- Select + New.
- Under Customers, select Credit Memo.
- Select the item you created from the drop-down list in the Product/Service field.
- Enter the amount that is not being returned to the tenant in the Amount field.
- Select Save and Close.
Once the credit memo is created, the next step is to apply the credit to the invoice you created. To apply the credit to the invoice:
- Select + New.
- Under Customers, choose Receive Payment.
- Verify that the credit and invoice are both selected and that the amounts are equal.
- If you don't see the credit and the invoice, they have been automatically applied, and you can select Cancel to skip this part of the process.
- Select Save and Close.
Once done, it will show a zero balance. For more details on how to return a part of a security deposit, see this article: Refund a security deposit in QuickBooks Online.
Additionally, you can get more tips about accepting electronic customer payments and void transactions in QuickBooks Payments:
Please let me know if you have follow-up questions while processing refunds to your customers. I'm just a few clicks away to help. Have a good one!
