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Samar1
November 21, 2023
Question

Accounting in QB Online Receipt of Tuition Fee Payments made online by Cr. Cards, ACH etc.

  • November 21, 2023
  • 1 reply
  • 0 views

Ours is a small business start-up providing tuition services.  Our students are encouraged to make payment of tuition fees online using their credit cards etc. through JackRabbit online platform whose app is connected to our QB Online Simple Start facility.  We find that the payments of tuition fees received online are routed through JackRabbit app and are first recorded automatically in the form of a Journal Entry debiting Undeposited Funds Account and crediting Tuition Fee Income Account.

 

These payments are received into our Business Checking Account and as this account is linked to our QB Online, bank deposit transactions are generated for review, categorization or matching.

We tried to match these payments directly with the debit amounts appearing in the Undeposited Funds Account by categorizing these receipts into Undeposited Funds.  But, QBO rejects this attempt saying that the category used must be a Bank account, not the Undeposited Funds.

 

Alternatively we transferred these Undeposited Funds Debit entries created by the JackRabbit App in the form of Journal through "Deposit to Bank" thereby the fee payments received online into our Bank Account through JackRabbit are appropriately accounted in our Bank Account Ledger/Register.  By doing so, the payments lying in the Undeposited Funds are closed and transferred to the debit of the Bank Account reflecting the receipt of tuition fee payments into our books. Thus, it may be seen that the Tuition Fee Income account got credited by the Journal entry created by JackRabbit and the payments received online by the Bank have now been duly recorded in our QB Bank Account Register.  

 

Now, the problem we face is that all the bank transactions generated by our bank feeds stubbornly remain unmatched, uncategorized and unresolved.  Our attempts to match these transaction with undeposited funds entries are outright rejected or categorizing them as bank transactions results in duplicate bank receipts in the Bank Register.

 

Please guide us through in this process and advise as to how to clear the transactions created by our bank feeds.

1 reply

S
ShyMae
November 21, 2023

I know that navigating the intricacies of recording and reconciling transactions can be challenging, especially when dealing with online payments and bank feeds. Rest assured, I'm here to guide you in handling this situation, @Samar1.

 

I see that you're receiving payments through JackRabbit, which are recorded as journal entries. If you've issued invoices to your students, you can edit these entries to affect the accounts receivable (AR) account. This will allow you to apply the payments to the corresponding invoices, keeping your accounts in sync and up to date. 

 

Here's how:

 

  1. Hover to + New, then select Receive payment.
  2. Choose a customer.
  3. Under Outstanding Transactions, select the invoice.
  4. Under Credits, select the journal entry to apply it as a credit.
  5. Hit Save and close.

 

On the other hand, when payments are direct and not tied to specific invoices, creating a bank deposit is recommended to move the funds from Undeposited Funds to your bank account.

It appears that you have already made changes by transferring the entries created by the app. Please ensure that you undo these changes first to ensure that transactions appears on the Bank Deposit page for proper reconciliation.

 

Once done, you can match the bank deposits with the downloaded transactions in your feeds. If you've categorized or added them as duplicates, it's essential to undo those actions first to maintain the accuracy of your financial records.

 

Additionally, you can save time by setting up bank rules that automatically categorize your future transactions.

 

I'm still here, ready to back you up if you need further assistance or clarification while working on the transactions in your bank feeds. Use the reply button to submit your response, and rest assured I'll take care of them. 

S
Samar1Author
November 22, 2023

Hi Shymae, Thank you so much for your prompt communication in this regard.

 

In our case, we do not raise any specific invoices on the students for the payment of the fee due from them.  The aspiring students straight away make payments online as per the prescribed fee schedule with their credit card etc. and JackRabbit routes the payments to our Bank Checking Accounts. Since JackRabbit App is connected to our QB Online facility, simultaneously, it generates a Journal Entry in our QB Accounts as under (Example):

Journal: 

Undeposited Funds          Dr $700.00

    Tuition Fee Income                                Cr $600.00

    Registration Fee                                    Cr $100.00

The amount of $700.00 in the Undeposited Funds is then automatically reflected in the Deposit to Bank page of QBO.

 

In the usual cases, the funds collected by way of cheques and cash and lying in our hands have to be physically deposited into the bank and such deposit to bank is recorded in the QBO Bank Register automatically.  At the same time, the amount lying in the Undeposited Funds account gets reduced to the extent of the actual deposits made.

 

In our case, however, payments are not physically received at our end but are directly deposited into our Checking Account online through JackRabbit platform. At the same time, JackRabbit app automatically passes a journal entry in our QBO books of accounts just as the one in the example above.  The effect is that our Tuition Fee Income account is properly credited with the collection made online but the corresponding debit that should go our Checking account is now held in the Undeposited Funds awaiting ultimate transfer to the Checking account. Now, the transaction created by the bank feed in the QBO needs to be matched/categorized to achieve the transfer of this online receipt into our Bank Register. QBO however does not permit categorizing this transaction as Undeposited Funds and insists that the category chosen must be a Bank account.  In this context, it would enlightening if you would elaborate on your suggestion that we adopt a Bank Rule to achieve automatic categorization of bank-feed transactions, particularly as to which account category must be assigned to this rule in this case. 

 

As per your suggestion, we will try matching the bank-feed generated transaction with the applicable entry in the Deposit to Bank page and we hope that by doing so,

     -  the transaction entries in the Deposit to Bank page and the bank-feed transaction list would be closed and

      - the desired purpose of removing the online payment from the Undeposited Funds account and adding it to the deposits in the QB Bank Register is achieved.

 

Please advise whether our understanding is correct.

 

Also please confirm if our presumption that the Undeposited Funds entries reflected in the Deposit to Bank page continue to remain in the Undeposited Funds Account until they are actually selected and transferred to the relevant Bank Account as per procedure is correct.

 

Regards

 

 

 

 

 

S
ShyMae
November 22, 2023

Thank you for providing a detailed explanation of your payment process., @Samar1.

It's evident that your organization has a unique payment collection process, with students making online payments through the JackRabbit platform. The corresponding journal entries are automatically downloaded to QBO, resulting in the funds being reflected in the Undeposited Funds account. To transfer them to your checking account, a bank deposit will need to be created.

 

Meanwhile, you mentioned your interest in creating bank rules. With this feature, you can define specific conditions for incoming transactions and assign the appropriate category to them. However, it's important to note that the UF account cannot be set as a category. Check out this article to learn how it works: Use bank rules to categorize online banking. 

 

Regarding your understanding of matching the imported transactions in the bank feeds, your approach seems correct. Just remember that you'll still need to record a bank deposit to move the funds to the correct bank account before proceeding with the matching process.

 

As for your presumption about the UF entries, it is indeed accurate. The transactions will remain until they are selected and transferred to the relevant bank account. 

Moreover, after categorizing and ensuring all transactions are matched, you can start reconciling your QuickBooks account. It will ensure that all financial records are accurate and discrepancies are resolved promptly.

 

I'm still all ears if you require further assistance while doing the process. I'll keep this thread open so that you can comment back anytime. 

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