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usermichael-lamb
March 15, 2022
Question

Undeposited funds and bank rec

  • March 15, 2022
  • 1 reply
  • 0 views

How to fix undeposited funds - invoices have been created for customers who are also directly debited on their credit cards via either ACH Wells Fargo or Intuit linked CC. The amounts are entered into each AR account immediately as PAID. However, the deposit entries also appear in the undeposited funds account with a categorization of Sales Income which inflates revenue/sales and causes a bank rec discrepancy. Do you know how we can fix this now for 2021 accounts? (I have an opening balance issue in 2021 which I think is related to billings on 12/31/2020 which have been receipted in 2021 too)?

1 reply

A
Archie_B
March 15, 2022

It's good to see you here in the Community, usermichael-lamb.  
 

Let me share some information and how you can manage your transactions in QuickBooks Online.  

Undeposited Funds account let's you keep a record of payments in QuickBooks until you physically deposit the same payments at your real-life bank. Banks often combine all the payments you deposit into a single transaction. Once you have the deposit slip, you can start recording and combine those transactions in QuickBooks with a bank deposit.  

However, if you connect your bank and credit card accounts into QuickBooks, you don't need to combine downloaded transactions or use Undeposited Funds since QuickBooks already has the info from your bank. You just need to categorize and match those transactions in QuickBooks.  

 

Like this:  

 

  1. Go to Bookkeeping, then Transactions.
  2. Select Bank accounts .
  3. Click the tile for the account you want to review.
  4. Go to For review tab to start your review.  

I've added this article for more details: Categorize and match online bank transactions in QuickBooks Online.  

 

After that, you can start reconciling those transactions. Use this link as your reference: Reconcile an account in QuickBooks Online.  

 

Get back to me if you still need help or if you have any follow-up questions about banking. I'll be here to check. Have a great day!

    U
    usermichael-lambAuthor
    March 15, 2022

    Ok, we have the bank account and credit card linked so should not have to use undeposited funds which are leading to an overstatement of revenue and variance in our bank rec. Subsidiary questions I have are then the following:

    1. How can I reverse what is already in undeposited funds which are causing the duplication in these two areas - can I do it by journal or if not by what other way?

    2. We are using invoicing and then directly charging a lot of customers by credit card, I know we could do that by sales receipt. Is the latter a requirement?

    Thanks

    Michael

    U
    usermichael-lambAuthor
    March 15, 2022

    My other question re-categorization was if not using undeposited funds is this changed to AR (other side being cash) rather than income/revenue since the invoice has gone to revenue and AR, which would be standard accounting practice.

     

    Thanks

    Michael

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