and now we will learn how to record credits to customers accounts let us imagine on February
24th Holden gave Betty to video hours credit specifically for invoice number 14 here is
Betty's open invoice report before Holden records the credit we know that two video hours is equal
to 600 dollars therefore invoice number 14 will decrease by 600 dollars and when Holden's finished
recording the credit invoice number 14 will go down to $3,400 let's take a look at how to record
this here's Betty's open invoice before we record the credit and here's invoice number 14 from the
main menu click customers create credit memo refund notice QuickBooks remembers that this is
the second credit memo we are making and therefore automatically puts the number 2 if your screen
does not have the number 2 and credit number you should put the number 2 for this example click the
calendar box and go back to February 24th that's the day Holden is issuing the credit we choose
Betty as our customer we click directly under the word item and choose the item we're giving credit
for which is video click directly under the word quantity and type the number 2 when we push tab
the credit memo totals $600 now look what happens at the moment we click Save and close first we
get a warning about the message we know we're enumerated on credit memos correctly so we just
click Keith's number here is the most important pop up the available credit box are we going to
give a refund retain as credit or apply to an invoice click on apply to an invoice if you make
that choice and you click OK the apply credits to invoice window opens up notice QuickBooks assumes
that you are applying the credit to the oldest one we are not therefore we have to uncheck the
wrong one and recheck the correct one in this case we place the checkmark on invoice number 14 which
currently has a balance of $4,000 before applying this six hundred dollar credit when we click done
we look back at the open invoice report and we notice the results are exactly as what we expected
invoice number fourteen has decreased to three thousand four hundred dollars what happens in the
trial balance when you record a credit memo well when you recorded your original invoice accounts
receivable and income both went up therefore when you record a credit memo accounts receivable and
the same income account both go down therefore this credit memo was recorded as a minus two
account receivable and in our example a minus two video income let's open our trial balance
and see what the numbers are as a result of the credit memo when we double click the video income
account or the number next to the video income we see the video income account opens up if you look
all the way down here at the bottom you see that the to credit memos that we made in this video
and the recent video both caused video income to decrease let's close it out when we double
click account receivable and we scroll to the very bottom we can see that this credit memo decreases
accounts receivable it was twenty-seven thousand four sixty-nine then the credit memo we just
recorded which is credit memo number two decreased accounts receivable and made it 26800 M red 69