How to record an incorrect direct debit by a supplier that was partially refunded

We know a way on how to record the incorrect direct debit that was partially refunded in QuickBooks Online (QBO), ALKS.

The first thing we need to do is correct the original bill. Since the direct debit was incorrect, we can create a new bill for the correct amount of the original invoice (which is £126). This creates a record of what you actually owe. For more details on this, you can check out this article: Enter and manage bills and bill payments in QuickBooks Online.

Next, create a journal entry to handle the incorrect direct debit and the partial refund. This will help adjust your accounts and clear these transactions from your bank feed. Please ask your accountant which account to use. Here’s how:

1. Click the Plus Create button on the left menu.
2. Under Other, select Journal Entry.
3. On the first line, debit the Accounts Payable account. The debit amount should be £1450.13.
4. Select the supplier's name in the Name column.
5. On the second line, credit the Bank Account from which the overpayment was made. The Credit amount should be £1450.13.
6. Add a clear description in the Description column, such as "Correction for incorrect direct debit and partial refund from [Supplier Name]."
7. Press Save and close.

Finally, we'll match these transactions to what's in your bank feed yo clear everything up and ensure your accounts are accurate. Here's how: 

1. Go to My Apps on the left menu.
2. Select Accounting and choose Bank Transactions.
3. Find the two transactions from your bank feed that you couldn't match before.
4. Find the direct debit for £1576.13 and the refund for £1450.13.
5. For the direct debit of £1576.13, use the Find Match option. Match this to the Bill you created for £126 and the Journal Entry you created for £1450.13.
6. For the refund of £1450.13, you should also be able to match this to the other side of the journal entry.

This process will clear both transactions from your bank feed and correctly record them in your accounts. If you want to learn more about this, you can read this article: Categorise online bank transactions in QuickBooks.

If you have further questions about managing supplier transactions or require assistance with QuickBooks, please feel free to revisit this thread.