Many people get confused when using Quickbooks due to the Undeposited Funds feature. When you receive payments, use a payment item on an invoice, or enter a sales receipt, QuickBooks knows you've received money. When you record each payment, you can choose how you want QuickBooks to handle the deposit.
In Edit:Preferences:Payments:
You can do one of the following.
1. Use the Undeposited Funds account as the default: Any payments you receive from customers automatically go into this holding account until you deposit the payment into a bank account. The Undeposited Funds account acts as a holding account until you go to Bank:Make Deposits and choose each payment received so that the TOTAL deposit amount in entered into the QB register to match the deposit that will show on the statement.
2. Use the "Deposit to" option to deposit the payment directly to a bank account: If you choose this option, funds are transferred immediately to the bank account. The funds do not appear in the Undeposited Funds account and you do not need to deposit them using the Make Deposits window.
If you receive payment and deposit immediately then you may not want to use the Undeposited Funds Account.
If you received several payments and then deposit them this is a great feature because each time you enter payment from a Customer the payment goes to the Undeposited Funds account and then when you actually post the deposit it will match the total deposit on your bank statement when you reconcile.
Say i have a an invoice for $25 and the client pays me a $50 bill. I want to deposit this in the bank but when i go to the undeposited funds it only shows up as $25 dollars. How do i address this?
ReplyDeleteMark,
ReplyDeleteIf you are accepting the $50 for payment of that Invoice then you need to change the Invoice to $50 and then post the payment.
If you are accepting the extra $25 as a credit then post the $50 payment and choose "Leave the credit to be used later" at the bottom left of the Customer Payment screen.
Please reply and let me know if this answers your question or if you have further questions so that others benefit from your post.
No, I meant to indicate that I provided the necessary $25 change to the client so the invoice is correct so no credit is needed but I'm left with $50 on my desk. When I fill out the deposit ticket at the bank it won't match the information in Quickbooks as the invoice is reading as $25.
DeleteMark
Mark,
DeleteOk, so you are saying you got a $50 bill and gave $25 change.
In that case when you enter the deposit you will either need to get cash back and note it (along the bottom of the deposit screen) or add a line to the deposit and in the "Received From" drop down enter your name and in the "From Account" enter an Equity Account such as Member Equity. The extra money actually came from you so you need to post it as such.
I hope this answers your question. If not, let me know.
Thanks!