How do I record when a customer over pays and wants to get cash back instead of having a credit?

How do I record when a customer over pays and wants to get cash back instead of having a credit?



How to record the repayment when a prepayment gets overpaid (and other financial tongue twisters)

The customer sends a check for more than the total on the order, or otherwise overpays on goods or services. When a cash refund is desired rather than a credit on the account, how does this get recorded? 

When there is an overpayment on a prepayment, two items need to be recorded:
Create a credit memo for the overpaid amount. Use a service item on the credit memo.    When creating the service item, use Customer Prepayment as both the Sales and Expense Accounts.
  1. On the customer card, check the vendor checkbox (we need to make a payment).
  2. Create Credit Memo for the overpaid amount.
  3. Create a service item with Customer Prepayments accounts as both the Sales and the Expense 
    Accounts.
  4. Create a Payment (from the Bank Menu) .
  5. Enter the Customer in the Vendor field on the payment.
  6. Create a Cash Receipt.


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