More information is needed to provide guidance. How did you record the initial deposit received two years ago? Was it entered in AR as a "Customer Cash Receipt?"  I would presume they didn't prepay the entire estimated project cost in advance, but as you say, only a deposit. Either you posted it solely to a GL account for "Customer Deposits", or you posted it through AR as a Customer Cash Receipt.  In either event, it would not have affect Job Cost, so that's not an issue.

If it were entered in AR as a "Customer Cash Receipt" you would use AR > Tasks > Adjust Receivables to select the unapplied customer cash, and choose "Refund".  That activity would then move the amount from the GL account designated in AR Setup for Customer Cash Receipts and move it to the GL account designated in AR Setup for Customer Refunds.  When you issue the check in AP, you would put it again the Customer Refund GL account.

For further guidance, please describe how the initial deposit was entered.

Art Minds
Independent Senior Consultant
Pasadena, California

Art,

We posted it as a "sale" in Accounts Receivable initially.  It DID go in as revenue to the Job and in G/L it hit both the cash and Sales GL accounts.   We don't have a "deposit" holding account in GL since 99.9% of all jobs go to completion and are "quick" from deposit to finalization.

In my head I'm thinking to keep a clear paper trail, that I would enter a credit invoice for the sale and then somehow clear that credit invoice out of the AR customer account by applying the refund check I wrote to the customer to it.  Is that even possible?  I have not "played" with options in the system to see it's outcome.  I am trying to get a good grasp on how to do it before going into the software and processing it. 

Does that info help?

Guybor, 

You would need to use AR > Adjust Receivables. Select the Customer, and then find the original payment. Select it, enter a current Accounting Date, and select "Unapply". That will move that payment to the status of "Customer Cash Receipt" (designated with the abbreviation of "Cs cs rc" in the AR system and leave the original invoice as open (unpaid).  Exit and post that transaction.

Then return to AR > Adjust Receivables and select the original invoice to which the payment was applied, again being careful to enter a current Accounting Date, adjust that billing to the desired reduced amount, designating the adjustment as a Billed Credit.  Exit and post.

Then return to AR > Adjust Receivables, again using a current Accounting Date, and select the "Cs cs rc" of the unapplied original cash receipt, and choose "Apply" to pay off the now-reduced original billing.  That will clear the receivable to zero, and leave the remaining unapplied "Cs cs rc" after existing Adjust Receivables and posting the payment application.

Then return again to AR > Adjust Receivables, select the "Cs cs rc" balance remaining, and click "Refund" as the adjustment method, being sure to enter a current Accounting Date for this adjustment.  That will then clear this cash balance from the customer account and move the amount to the GL account designated in AR Settings for "Customer Refunds."

Then go to AP > Tasks > Record Manual/Print Quick Checks and either use One Time vendor or setup the Customer as a Vendor, and code the distribution solely to the GL account for Customer Refunds.  Print the check and you're done.

Art Minds
Independent Senior Consultant
Pasadena, California

THANK YOU for the very detailed steps.  I was close to being on the right track, but was thrown off because I wasn't thinking of messing with the original invoice/payment.