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Jaye314
May 31, 2022
Question

Undeposited Funds

  • May 31, 2022
  • 1 reply
  • 0 views

Massage business - invoice is created is created for $94.50 (incl tax).  Customer pays with credit card and adds a tip of $18.90 added.  When invoice was created, payment was set to paid in full with the offset being "Undeposited Funds".  Payment of $110.39 hits the bank two days later ($94.50 + $18.90 - $3.01 CC fee).  

 

First question:  is this the best process to record the payment at time of invoice, ie. using the Undeposited Funds as the offset?

Second question: How do I clear the payment?  I tried splitting the payment to the applicable codes, Undeposited Funds $94.50, Tips $18.90, and Credit card fees $3.01, the entry is balanced but I'm getting an error saying, "Something is not right, select a bank account for this deposit."  I suspect the issue has something to do with the Undeposited Funds account.

1 reply

C
CharleneMaeF
June 1, 2022

I know how important it is to clear the payment in QuickBooks, Jaye314. I'll help you with that.

 

The Undeposited Funds account is used to keep a record of payments in QuickBooks until you physically deposit the same payments at your real-life bank. This allows you to choose where you want the funds to go. 

 

For us to accurately record the transaction in QuickBooks Online, I'd recommend following the steps below.

 

To start, I'd recommend turning on the Tips feature. Here's how:

  1. Go to the Gear icon and then select Account and Settings.
  2. From the left menu, select Sales.
  3. Select the pencil icon on the Sales form content section.
  4. Check the Tips (Gratuity) box.
  5. Select Save, then Done.

 

Then, let's create a service item for the tip and associate an income account with it:

  1. From the Sales menu, select Products and Services.
  2. Click the New button and choose either Service.
  3. Enter the tip details and go to the Sales information section.
  4. Select the tip account in the Income account field.
  5. Tap Save and close.

If you haven't added a tip account, please see this article to learn how: Set up Accounts in the Chart of Accounts.

 

After that, you also have to add a credit card fee item. Here's how:

  1. From the Product/Service page, select Add New.
  2. Choose Service.
  3. Enter the description of the credit card fee in the Name field.
  4. Click Save and close.

 

Once done, you can now edit the invoice and add these items. Then, receive the payment and deposit them to the correct account.

 

Additionally, I encourage checking your Undeposited Funds account from time to time to clear out any payments waiting to be deposited. This ensures your books are accurate. Here's how:

  1.  Go to Bookkeeping or Accounting.
  2. Select Chart of accounts.
  3. Find the Undeposited Funds account on the list.
  4. Select View register.

 

We're looking forward to hearing again from you again if you have other questions about recording your transactions. We're always here to help you out.

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