How do you handle "Sales Returns" in QuickBooks?

Handling "Sales Returns" in QuickBooks is primarily done by creating a Credit Memo. This method reflects the return of the item in the financial records appropriately and allows you to adjust inventory levels and customer accounts accordingly.

When a customer returns a product, issuing a Credit Memo allows you to record the decrease in sales revenue and effectively gives the customer credit toward future purchases or facilitates a refund, depending on the situation. The Credit Memo ensures that both the inventory and the accounts receivable are updated properly, maintaining accurate accounting records.

The other options, while they might involve aspects related to sales returns, do not specifically address how to handle the returns within the context of QuickBooks. For example, issuing a refund is a potential outcome of creating a Credit Memo but does not show the process of recording the return itself. Creating a Sales Order is more suited for initiating a new sales transaction rather than managing returns. Reversing the invoice payment is not a necessary step, as the Credit Memo itself handles the financial adjustment needed for a returned sale.