I've been on the chat many times with QB support over this issue, and they get me partially towards solving this problem. However, I thought I would ask about it here since there seem to be quite a few facets to my problem.

I run a frozen food business. The food is delivered in re-usable glass containers. I charge a refundable deposit for these containers. I was advised to take the following steps to avoid reporting the refundable deposit as income.

1. Add a line item on the first invoice for the container deposit.

2. Create an expense for the amount of the deposit.

3. Create a matching credit memo for the deposit (I have been using a positive number here - should it possibly be a negative number??)

Before I refund the deposit, there is a discrepancy between different customers. Sometimes, the expense shows up in the customer's transaction list, and sometimes it doesn't, although it does show up in the list of expenses overall. Perhaps this has to do with the order in which I did 2 and 3 above?

But, generally, this works fine until I come to refund the refundable deposit. I send the customer an e-transfer and match this to the expense (#2 above). For some customers, once this is done, it shows that the credit memo is "unapplied". For other customers, it shows the credit memo as "closed". Why would this be?

The serious problem that I have is that these expenses and credit memos create a problem in reconciling the bank account used for the transactions. At the moment, this bank account balance differs from the amount in QB by twice the total value of all the container deposits, regardless of whether they have been refunded or not.

I thought this article might be helpful.

https://quickbooks.intuit.com/learn-support/en-us/banking/dealing-with-refunds-when-reconciling-bank...

So, I tried creating a refund receipt matching the credit memo. All this did was to make the discrepancy in the reconciliation worse. Despite what this article implies, I was unable to make a refund receipt as a negative value.

Many thanks for the help.

Jennifer