What do you do when a customer returns goods?

When a customer returns goods, issuing a credit memo is the appropriate action to take. A credit memo allows you to officially document the return of merchandise and adjust the customer's account accordingly. This process not only reflects the decrease in sales revenue due to the returned items but also ensures that your inventory reflects the addition of those returned goods.

By creating a credit memo, you acknowledge the transaction's reversal, which can be applied to the customer's outstanding balance or can be refunded, depending on your business's return policy. This helps maintain accurate financial records and provides a clear audit trail for both your business and the customer.

Using a sales receipt would not be suitable in this situation, as sales receipts are generally issued for sales transactions, not returns. A thank you note, while courteous, does not address the financial implications of the return. Recording a new invoice would also not be appropriate, as no new sale is being made—rather, a sale is being reversed. Therefore, issuing a credit memo is the most effective way to handle customer returns in QuickBooks.