Handling an Overpayment in QuickBooks

Dan DeLongKnowledgebase, Quickbooks OnlineLeave a Comment

When you receive more money than your sale is for, and the customer says, “Keep the change,” how do you handle that in QuickBooks?

Let’s say this is an invoice for $26.50 and the customer rounds up to $27, what do you do with the extra 50 cents? The 50 cents is moneys received, so it should be now counted as revenue.

There are a variety of ways to handle this, the right way depends on where you want to see the overpayment:

Option 1: Adjust the original sale (thorough)

If you want add the 50 cents to the invoice or sales receipt, you would:

  1. Create a new Product/Service
    • The item type would be Service called “overpayment”
    • Income account would be whatever income account you’d like in order to track this revenue.
  2. Edit the original sales transaction to add it to the total. You can add the situation in the description field
  3. If the original sale is an invoice, you would edit the original payment to ensure the overpayment is applied to the Invoice

Now you have an item that you can use in the future if this should happen again.

Option 2: Account for the revenue through a Journal Entry (Once and done)

If you don’t foresee this happening again, you can account for the revenue on a journal entry and call it a day. We will assume this is an Invoice-Payment scenario

  1. Create a new Journal Entry dated the same day as the invoice.
  2. Enter Accounts Receivable on the first line and enter the amount of the overpayment in the debit column.
  3. In the memo, enter the details of the overpayment.
  4. Enter the customer in the Name dropdown.
  5. One the second line, enter the income account you want to track this overpayment.
  6. Edit the original payment to ensure the overpayment is applied to the Invoice, and the Journal Entry

Option 3 Account for the revenue directly on the bank deposit (Quick & Dirty)

Depending on how these transactions were made and if you have integrations, there might be a deposit already made, but there is a discrepancy You can account for the discrepancy directly on the deposit

  1. Edit the deposit.
  2. In the “Add Funds to this deposit” section, enter the revenue account you want to track the overpayment.
  3. In the memo enter the details of the overpayment.
  4. Enter the amount of the overpayment,
  5. Save and close.

Now the deposit matches what was actually deposited and you accounted for the extra income.

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