Credit memos are not subtracting the refund amount

Overview

Customers can sometimes encounter an issue where Credit Memos created for processing a refund to a customer for returned items are not subtracting the refund amount from the revenue account.

Information

This is often an indication that the credit memos/refunds are probably being posted to a different account.

The Credit Memo usually posts the transaction to the default account for the location at the time of its creation. This will usually be the control account specified under Sales Returns in File > Setup > Accounting > Location/Sub-Locations > Accounts tab.

You cannot cancel or delete Credit Memos because they are final documents and are linked to accounting entries. The workaround for this case would be to create a journal entry for the same amount to move the refund amount to the right revenue account.

Refer to Creating and Working with Credit Memos for more information on using Credit Memos for processing refund amounts to customers.